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All single-member LLCs and Q-Subs with employees must have EIN

Since 1999, the Internal Revenue Service (Service) has proscribed, as one of two allowable methods, the reporting and payment of employment taxes under the Employer Identification Number (EIN) of the sole member of a limited liability company (LLC) that is disregarded for Federal tax purposes (SMDELLC).

This method was also allowed for single-owner qualified subchapter S corporations (Q-Subs) that are disregarded entities for tax purposes. As of January 1, 2009, this method is no longer allowed for either.

For wages paid beginning January 1, 2009, SMDELLCs and certain other single-owner disregarded entities (such as some Q-Subs) must have their own EIN for employment tax reporting and payment purposes. This change was made in a previous amendment to Treas. Reg. § 301.7701-2.

To prevent possible misreporting or misallocation of payments, any affected LLC or Q-Sub currently using its sole owner's EIN for employment tax purposes should apply to the Service for its own EIN prior to its next reporting and/or payment deadline.

If you have questions about this topic or any other legal issue, please contact any member of the firm's Tax and Finance Team.

Even though the content of the above Greenebaum Doll & McDonald e-bulletin is primarily informative, state and federal law obligates us to inform you that this is an advertisement. You have received this advisory because you are a client or friend of the firm.

About Greenebaum Doll & McDonald PLLC
Greenebaum Doll & McDonald PLLC is a widely-respected business law firm with approximately 200 legal professionals in six offices, serving local, national and international clients in virtually every industry. A forward-thinking business law firm, Greenebaum is committed to the practice of Breakthrough Law®.

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