Tax identification numbers are essential for businesses and individuals to navigate tax reporting and compliance. Among these identifiers, FEIN (Federal Employer Identification Number) and TIN (Taxpayer Identification Number) often create confusion due to their overlapping purposes and distinct applications.
Core Functions of Tax IDs
Tax identification numbers serve as unique identifiers for entities and individuals engaged in financial transactions, ensuring accurate tax reporting and compliance with federal and state regulations. The IRS uses these numbers to track tax obligations, process returns, and communicate with taxpayers. For businesses, tax IDs are required to open bank accounts, apply for business licenses, and file tax returns. They are also critical in payroll processing, where employers report employee earnings and withholdings.
The IRS issues different types of tax IDs based on specific needs. For instance, the Individual Taxpayer Identification Number (ITIN) is designated for individuals ineligible for a Social Security Number (SSN) but required to comply with U.S. tax laws. Similarly, the Employer Identification Number (EIN) is assigned to businesses, trusts, and estates. These numbers help distinguish taxpayers, reducing fraud and errors that could lead to penalties.
FEIN Criteria
The Federal Employer Identification Number (FEIN) is a nine-digit number assigned by the IRS to U.S. business entities. It identifies businesses for tax purposes, enabling the IRS to oversee compliance. Businesses such as corporations, partnerships, and non-profits must obtain a FEIN if they have employees or operate as a partnership or corporation. 1Internal Revenue Service. Get an Employer Identification Number
FEINs are also commonly required by banks to open business accounts and may be needed when applying for licenses, depending on local rules. Obtaining a FEIN involves an online IRS application requiring details such as the business’s legal name, address, and the responsible party’s information; the online application requires the responsible party’s Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). 2Internal Revenue Service. Get an Employer Identification Number
TIN Criteria
The Taxpayer Identification Number (TIN) is a broader term encompassing various identifiers the IRS uses for individuals and entities; TIN types include the Social Security Number (SSN), Employer Identification Number (EIN), and Individual Taxpayer Identification Number (ITIN), among others. 3Internal Revenue Service. Taxpayer Identification Numbers (TIN)
Key Differences
The difference between a FEIN and a TIN lies in their purpose. The FEIN is primarily for businesses, serving as their identifier with federal tax authorities. It is crucial for filing corporate tax returns and reporting payroll taxes. The TIN, on the other hand, covers a wider range of taxpayers, including individuals and entities, and incorporates identifiers like SSNs and ITINs. This broader scope makes the TIN central to individual income tax filings.
Verifying Proper Usage
Using FEINs and TINs correctly is critical for tax compliance. If you lose your EIN or need the number, the IRS can verify and provide it to an authorized caller at 800-829-4933 (Monday–Friday, 7 a.m.–7 p.m. ET). 4Internal Revenue Service. Employer Identification Number
For individuals, accurate TIN usage is equally important, particularly for SSNs and ITINs. Authorized payers who file certain information returns can use the IRS TIN Matching program to validate a payee’s TIN/name combination before filing. 5Internal Revenue Service. Taxpayer Identification Number (TIN) Matching