EIN Separate From SSN- CIP Procedures

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Question:

I have a new customer who has a single member entity that is disregarded for tax purposes (rental income and expenses are reported on personal tax return), but has been assigned an EIN separate from his SSN. The entity is 12 years old and he has misplaced his letter from the IRS verifying the LLC's EIN. What is the easiest way to document this to comply with CIP procedures? Can I take his and his accountant's word that the EIN is correct?

Answer:

by Ken Golliher

When an entity is "disregarded for income tax purposes" it uses its owner's TIN. In your example, it would use the SSN of the individual. So, I'm not entirely certain about what you are being told.

Either way, your bank's CIP spells out the proper method for verifying a name/TIN combination and you are stuck with that.

Without that restriction, your customer could:
* request a Letter 147C here confirming the name and number or
* provide you with the first page of last year's income tax return.

Answer:

by John Burnett:

Just because the business happens to have an EIN, that does not mean that's the number you should use for CIP purposes. As Ken noted, a disregarded entity uses its owner's EIN, the SSN in this case of the sole member. The EIN was issued years ago, probably because even a disregarded entity LLC has to have an EIN if it has employees and tax withholding.

Answer:

by Ken Golliher:

Notice that the link I supplied doesn't route you to the IRS web site. While the 800 number there sounds "IRS enough" to be convincing, I'm going to retract that suggestion and regurgitate the instruction from IRS Publication 1281:

1.
Write the Internal Revenue Service Center where you file your income tax return, and ask the IRS to send you a Letter 147C