How a Foreigner Can Obtain a Tax Identification Number When Forming a US Corporation

All EIN applications (IRS Form SS-4) must identify the name and social security number of the principal officer or manager of an entity. The IRS refers to this person as the “responsible party”.

Until recently, this requirement posed a problem when the responsible party was a foreigner. As a practical matter, where there was no officer or manager with a US social security number, the resolution was to identify a US person (with a social security number) as an officer of the corporation or manager of a the LLC. After obtaining the FEIN, the US person would be removed as an officer or director. While this “solution” did not sit well with many practitioners, all other solutions were impractical, time consuming and too burdensome.

Now that the IRS has become aware of this work-around, it has warned that it will “pursue enforcement actions to prevent the misuse of EIN applications”: http://www.irs.gov/businesses/small/article/0,,id=228578,00.html)

The good news is that the IRS now permits a practitioner to call the EIN hotline ((800) 829-4933) and inform the representative that there is no responsible party with a Social Security Number, EIN, or Individual Taxpayer Identification Number. The IRS will permit the practitioner to obtain a FEIN over the phone.