In a new round of FAQ, FinCEN shed light on how entities that are disregarded from their owners for Federal income tax purposes should handle tax identification numbers (TINs) under the Corporate Transparency Act (CTA).
Previously, there was uncertainty about whether disregarded entities would be required to obtain a TIN solely for reporting beneficial ownership information (BOI) to FinCEN. The commentary in the final rule on BOI suggested that obtaining a TIN was straightforward, potentially implying that entities might need to acquire one if they did not already possess a suitable identification number. We now know that is not the case.
The FAQ outlines specific scenarios for disregarded entities reporting TINs:
- If the disregarded entity already has its own EIN, then it should report that EIN.
- If the disregarded entity does not have an EIN, then it is not required to obtain one solely for BOI reporting. Instead, it can use another type of TIN (or, if it is a foreign company, then a foreign tax identification number).
- If the disregarded entity has an individual owner as its sole owner, then it can report the owner's Social Security Number or Individual Taxpayer Identification Number as its TIN.
- If the disregarded entity is owned by a U.S. entity that has an EIN, then it can report the owner entity's EIN as its TIN.
- If the disregarded entity is owned by another disregarded entity or through a chain of disregarded entities, then it should report the TIN of the first owner up the chain of disregarded entities that has a TIN as its TIN.
These guidelines ensure compliance with BOI reporting requirements while aligning with IRS rules on TIN usage. Disregarded entities should carefully determine the appropriate TIN to report based on their ownership structure.
