Lake County News, CA – Estate Planning: Employer Identification Number and Administration
When a person acts as a representative as an estate trustee of another person or as a court-appointed personal representative of a deceased’s probate estate, they become a trustee.
A trustee must obtain an Employer Identification Number, or EIN, from the Internal Revenue Service.
The EIN is needed by a trustee to open financial accounts and sell assets, especially real estate, and to file representative tax returns.
What is an EIN? The IRS website states that “an Employer Identification Number (EIN) is a nine-digit number assigned by the IRS. It is used to identify the tax accounts of employers and certain others who do not have employees. The IRS uses the number to identify taxpayers who are required to file various business tax returns. EINs are used by employers, sole proprietors, corporations, partnerships, nonprofits, trusts, estates of deceased persons, government agencies, certain individuals, and other business entities.
EINs should not be confused with Social Security numbers.
When is an EIN required? A trustee needs an EIN when the trustee is acting either as a trustee to take control of assets owned by another person’s trust or as a court-appointed personal representative of a deceased’s estate .
Why is an EIN necessary? Trustees need an EIN to report the income the trustee receives in their capacity as representative and to file “fiduciary tax returns” to report that income and pay income taxes on behalf of the entity they trust. represent.
If a trustee used their own social security number when acting in a representative capacity, and not an EIN, the IRS would hold the trustee liable for income reported under that social security number even if the income did not belong to the trustee personally. .
How do I get an EIN? Before applying for an EIN, the trustee signs and dates a completed SS-4 Employer Identification Number Application.
The SS-4 can be obtained from the IRS online. The SS-4 is usually completed by the trustee’s attorney or tax accountant, as it requires a technical understanding of tax law.
Once the IRS Form SS-4 is completed, the EIN is obtained by using an online IRS application, or by faxing or mailing the completed EIN SS-4 application to the IRS.
The IRS no longer assigns EINs over the phone, except to international applicants. The IRS does, however, accept calls to its 800-829-4933 hotline for information regarding EINs.
When the IRS online application is used, the IRS provides the EIN immediately after submission, unless a problem arises with the application.
It is necessary to proceed slowly through the online process, especially the webpage where the EIN application is summarized, before submission, and the next page where the EIN is actually assigned, after submission. These two pages must be printed. Neither is available thereafter.
Later, the IRS will also send the trustee a letter with the assigned EIN and with a “control name” for the trustee to use on trust tax returns.
Finally, the trustee provides a copy of the EIN letter from the IRS (or printout of the EIN assignment page if the IRS online application was filed) to banks, brokerages, insurance companies, title companies (when selling real estate) and tax preparers.
Without an EIN, the trustee cannot conduct business and cannot file tax returns.
The foregoing discussion is neither legal nor tax advice. Consult a qualified attorney or tax preparer for advice.