Benefits & Comp 7 min

Tax IDs: What They Are & How to Get Them

January 14, 2020

When people ask about tax ID numbers, they’re usually trying to find out what tax IDs are, how to get them, or whether they need one. Without getting too ahead of ourselves, the simple answer to whether or not you need a tax ID number is yes, if you pay taxes in the United States, you need one. But let’s start with the first question—what tax IDs are—then cover the rest in more detail after that.

What Is a Tax ID Number?

A tax ID, or TIN, is a unique, nine-digit identification number the U.S. Internal Revenue Service uses to keep track of any entity (a person or a business) that files a tax return. There are multiple kinds of tax ID numbers, the most common being Social Security numbers (SSN) issued to U.S. citizens by the Social Security Administration, and the second being an Employer Identification Number, or EIN. The reason tax ID numbers exist is simple: tax ID numbers ensure the IRS can distinguish every John Smith, Jane Doe, and Johnson’s Plumbing in the nation from the others of the same name. This is essential for keeping track of the taxes they’ve paid (or haven’t paid), issuing accurate tax refunds, and more.

Is a Tax ID Number the Same as an EIN?

When someone refers to a tax ID number, chances are good they’re talking about an Employer Identification Number, or EIN—and that’s what we’ll focus on below when we talk about how to get a tax ID number. However, you should know that an EIN is just one of the tax ID numbers issued by the IRS. A tax ID number may refer to any of the following:

  • EIN – an Employer Identification Number, issued to U.S. businesses for their own tax returns and usually required to be entered on an employee’s tax return to identify their employer
  • ITIN – an Individual Taxpayer Identification Number, issued to people who must pay taxes but who do not have or qualify for a Social Security number, such as resident aliens, nonresidents, student workers, or spouses and dependents of nonresident workers
  • PTIN – a Preparer Tax Identification Number, issued to professionals who are paid to prepare taxes for individuals
  • ATIN – an Adoption Tax Identification Number, issued as a temporary identification number to U.S. children who are being adopted domestically and who will apply for an SSN after their adoption is finalized

Why aren’t Social Security numbers included in the list above? Because even though SSNs are tax identification numbers, and they’re far more numerous and commonly referenced than any of the tax IDs above, they’re usually called by their proper name or referred to by the shorthand, “socials.”

Questions about running payroll? Check out our free Payroll Guide for Small Businesses.

Do I Need a Tax ID Number?

If you plan to file taxes—whether as an individual or as a business—the answer is yes, you need some form of tax ID number. You won’t be able to file a tax return without one.

If you are filing as an individual, you need a SSN or ITIN to file your return. If you are filing on behalf of a business, and your organization has employees or partners, you will need an Employee Identification Number to file (and your employees will need that number in order to file their own tax returns). However, if you are a sole proprietor with no employees or partners, you likely don’t have to obtain an EIN even if you have registered your business as an LLC; unless you file pension or excise tax returns, you can simply use your Social Security number or ITIN as your tax ID.

One thing to keep in mind is that you may need a new tax ID number if your business changes its ownership or structure; for instance, if your business changes from a sole proprietorship to a corporation or partnership, or vice-versa, you would need a new tax ID number. The IRS website has more details on this subject. Typically, if your organization changes its name without changing its status, you don’t need a new tax ID.

How to Get a Tax ID Number

Applying for an EIN is easy and free; you can do it online via the IRS website. In order to apply for an EIN online, your business must be located in the U.S. or its territories, and the person who applies for the EIN must have controlling interest in the business and have their own valid tax ID number. Whether the tax ID is an EIN, ITIN, or SSN, in order to apply online, the applicant must be an individual person; i.e., not a business or partnership. You can find more answers to EIN application questions here.

How Long Does It Take to Get a Tax ID Number?

If you apply online for an EIN via the IRS website, you will receive your number immediately after submitting your application. As soon as you have it, you can use your tax ID to open bank accounts, apply for a business license, or on a mailed tax return. However, it takes two weeks for the IRS to permanently record your number; until that time, you can’t use your EIN to file an online tax return, make a payment, or pass an IRS Taxpayer Identification Number (TIN) matching program.

You can also apply for an EIN via fax or regular mail. If you apply by fax, the process should take about four days; however, if you apply by mail, it may take four weeks or more to receive your EIN.

Are Tax ID Numbers Free?

Yes, tax ID numbers are free to apply for and obtain—and that applies to every tax ID number, including Social Security numbers. You can pay a service to get your tax ID number, but it’s not necessary and you won’t receive your tax ID number any sooner than if you apply yourself.

If you want to know how to apply for a Social Security number or obtain an Individual Taxpayer Identification Number, visit the IRS and SSA website links below.

How Can I Verify or Look Up a Tax ID?

You can’t look up a personal tax ID number online, or use an individual tax ID number to find out personal information about a taxpayer. However, business tax ID numbers are public record, and if you have information about that business or a tax ID number, there are multiple ways you can use that information to fill in the rest of the information you need, such as the business owner, location, business name, etc.

Check out our article to learn about 19 small business tools that can help your organization.

If you’re trying to get your employer’s EIN for filing taxes, that’s easy; just ask your HR department for it, or dig up your most recent W-2 or tax return.

If the business is a non-profit or tax-exempt organization, you can use the IRS’s own free search application: IRS Tax-Exempt Organization Search

If the business is public, and not tax-exempt, you can often find tax ID information by researching the business name online and looking for documentation filed with the SEC. However, if the business is private, you may have to search at the state or local level, which may involve a phone call to the business itself or a government office—so be prepared to explain why you need the information you’re looking for.

If you don’t know anything about the business aside from the EIN, you can use an online database like LexisNexis (paid) or FEINSearch (free for five trial searches after signup) along with an EIN to reverse-lookup the business name.

Conclusion

Having a tax ID number is an important part of living and working in the United States. While you need one in order to pay taxes, a tax ID number also makes a lot of other things possible, such as applying for loans, making large purchases, obtaining insurance, and operating a business (assuming you want to do so legally). That’s probably why the IRS and SSA make obtaining a tax ID as easy as possible—and why, if you have more questions about any of this, they’re ready to help. Good luck out there, taxpayer!

Rob de Luca
Copy Director | BambooHR

Rob de Luca is the copy director for BambooHR. Since 2016, he has written extensively on culture and best practices in the HR industry. He believes culture is the key to organizational success and that every HR professional has the potential to become a culture champion and strategic business partner.