Updating of Employer Identification Numbers, 26244-26246 [2013-10515]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 78, Number 87 (Monday, May 6, 2013)]
[Rules and Regulations]
[Pages 26244-26246]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-10515]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 301 and 602

[TD 9617]
RIN 1545-BK02


Updating of Employer Identification Numbers

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations that require any 
person assigned an employer identification number (EIN) to provide 
updated information to the IRS in the manner and frequency prescribed 
by forms, instructions, or other appropriate guidance. These 
regulations affect persons with EINs and will enhance the IRS's ability 
to maintain accurate information as to persons assigned EINs.

DATES: Effective date: These regulations are effective on May 6, 2013.
    Applicability date: For date of applicability, see Sec.  301.6109-
1(d)(2)(ii)(B).

FOR FURTHER INFORMATION CONTACT: David Skinner, (202) 622-4940 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act

    The collection of information contained in the final regulations 
has been reviewed and approved by the Office of Management and Budget 
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)) under control number 1545-2242.
    The collection of information in the final regulations is in Sec.  
301.6109-1(d)(2)(ii)(A). The collection of this information is 
necessary to allow the IRS to gather correct application information 
with respect to persons that have EINs. The respondents are persons 
that have EINs.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax return information are confidential, as required by section 6103 of 
the Internal Revenue Code.

Background

    This document contains final amendments to the Procedure and 
Administration Regulations (26 CFR part 301) under section 6109 of the 
Internal Revenue Code relating to identifying numbers. The Department 
of Treasury and the IRS published a notice of proposed rulemaking (REG-
135491-10) in the Federal Register, 77 FR 15004, on March 14, 2012, 
requiring persons issued EINs to provide updated application 
information to the IRS. The IRS did not receive any requests for a 
public hearing. Written comments responding to the proposed regulations 
were received and are available for public inspection at https://www.regulations.gov or upon request. After consideration of all the 
comments, the proposed regulations are adopted without amendment by 
this Treasury decision.

Summary of Comments

    The IRS received four written comments in response to the proposed 
regulations. One comment supported the rule in the proposed regulations 
requiring any person issued an EIN to provide updated information to 
the IRS in the manner and frequency required by forms, instructions, or 
other appropriate guidance (including updated application information 
regarding the name and taxpayer identifying number of the responsible 
party). This commentator also recommended changes to either the Form 
SS-4, Application for Employer Identification Number, or the Form 5500, 
Annual Returns/Reports of Employee Benefit Plan, to require additional 
information confirming the active status of a trust's EIN. 
Alternatively, the commentator suggested that the IRS could use a 
postcard to confirm the active status of trusts for EIN purposes. 
Although these suggestions are outside the scope of the regulations, 
the IRS will take them into consideration during future updates of 
those items.
    Three of the comments did not support the rule in the proposed 
regulations. Two commentators objected to the increased burden on 
entities resulting from the updating requirement and questioned the 
necessity of this requirement. Additionally, two

[[Page 26245]]

commentators suggested that the estimated annual average burden of 15 
minutes provided in the Paperwork Reduction Act section of the proposed 
regulations underestimated the actual burden to entities and their 
agents. One commentator also argued that this rule is ``material'' 
because the related costs could reach over $100,000,000. Treasury and 
the IRS have considered these comments and, for the following reasons, 
these final regulations adopt the proposed regulations without change.
    Treasury and the IRS continue to conclude that updating this 
application information is necessary for effective tax administration. 
Some EIN applicants continue to list individuals temporarily authorized 
to act on behalf of EIN applicants (sometimes referred to as 
``nominees'') as principal officers, general partners, grantors, 
owners, and trustors on EIN applications. The listing of nominees or 
other individuals who are no longer associated with the entity prevents 
the IRS from gathering and maintaining correct and current information 
with respect to the responsible party for the EIN applicant. The 
requirement in the final regulations to provide updated application 
information will allow the IRS to ascertain the true responsible party 
for persons who have an EIN. This knowledge will prevent unnecessary 
delays by allowing the IRS to contact the correct persons when 
resolving a tax matter related to a business with an EIN. In addition, 
this information will help the IRS combat schemes that abuse the tax 
system through the use of nominees, which results in the concealing of 
the true responsible party for entities that hide assets and income.
    Treasury and the IRS also conclude that the costs related to this 
rule are not ``material,'' any associated burden on entities resulting 
from this requirement is minimal, and the costs and burden are 
outweighed by the benefits to tax administration described in the 
previous paragraph. An entity with an EIN will always know the identity 
of its appropriate responsible party, which is generally defined as the 
individual with the authority to control, manage, or direct the entity 
and the disposition of its funds and assets. The updating requirement 
in these final regulations requires entities to keep the IRS informed 
of the identity of the responsible party.
    The 15 minute burden estimate provided in the Paperwork Reduction 
Act section of the proposed regulations is an estimate of the burden in 
reporting and disclosing the correct application information to the 
IRS, not the burden an entity or its agent may incur in determining 
this information (which, as noted, is minimal because an entity will 
always know the identity of its responsible party). Following the 
publication of these final regulations, the IRS will publish the 
relevant form for persons issued an EIN to use to disclose the correct 
application information to the IRS. The relevant form will require 
these persons to update application information regarding the name and 
taxpayer identifying number of the responsible party within the 
applicable timeframe. Treasury and the IRS have determined that the 
amount of time necessary to fill out the relevant form and submit it to 
the IRS is minimal.
    These final regulations are applicable as of January 1, 2014, so 
that the IRS can publish the relevant form and instructions in advance 
of the applicability date.

Special Analyses

    It has been determined that these final rules are not a significant 
regulatory action as defined in Executive Order 12866, as supplemented 
by Executive Order 13563. Therefore, a regulatory assessment is not 
required. It also has been determined that section 553(b) of the 
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to 
these final regulations.
    When an agency issues a rulemaking, the Regulatory Flexibility Act 
(RFA) (5 U.S.C. chapter 6) requires the agency to ``prepare and make 
available for public comment an initial regulatory flexibility 
analysis'' that will ``describe the impact of the proposed rule on 
small entities.'' (5 U.S.C. 603(a)). Section 605 of the RFA provides an 
exception to this requirement if the agency certifies that the proposed 
rulemaking will not have a significant economic impact on a substantial 
number of small entities.
    The rules affect entities that have an EIN and the IRS has 
determined that these rules will have an impact on a substantial number 
of small entities. The IRS has determined, however, that the impact on 
entities affected by the rules will not be significant. The current 
Form SS-4, Application for Employer Identification Number, requires 
entities to disclose the name of the EIN applicant's ``responsible 
party'' and the responsible party's Social Security Number, Individual 
Taxpayer Identification Number, or EIN. Employers are required to know 
the identity of their responsible party. The amount of time necessary 
to submit the updated information required in these regulations, 
therefore, should be minimal for these entities.
    Based on these facts, the IRS hereby certifies that the collection 
of information contained in the final regulations will not have a 
significant economic impact on a substantial number of small entities. 
Accordingly, a Regulatory Flexibility Analysis is not required.
    Pursuant to section 7805(f) of the Code, the notice of proposed 
rulemaking preceding the final regulations was submitted to the Chief 
Counsel for Advocacy of the Small Business Administration for comment 
on its impact on small business and no comments were received.

Drafting Information

    The principal author of these regulations is Elizabeth Cowan of the 
Office of the Associate Chief Counsel (Procedure and Administration).

List of Subjects

26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

26 CFR Part 602

    Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 301 is amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

0
Paragraph 1. The authority citation for part 301 continues to read as 
follows:

    Authority: 26 U.S.C. 7805 * * *

0
Par. 2. Section 301.6109-1 is amended by adding paragraph (d)(2)(ii) to 
read as follows:


Sec.  301.6109-1  Identifying numbers.

* * * * *
    (d) * * *
    (2) * * *
    (ii) Updating of application information--(A) Requirements. Persons 
issued employer identification numbers in accordance with the 
application process set forth in paragraph (d)(2)(i) of this section 
must provide to the Internal Revenue Service any updated application 
information in the manner and frequency required by forms, 
instructions, or other appropriate guidance.
    (B) Effective/applicability date. Paragraph (d)(2)(ii)(A) of this 
section applies to all persons possessing an

[[Page 26246]]

employer identification number on or after January 1, 2014.
* * * * *

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

0
Par. 3. The authority citation for part 602 continues to read as 
follows:

    Authority: 26 U.S.C. 7805.


0
Par. 4. In Sec.  602.101, paragraph (b) is amended by adding the 
following entry in numerical order to the table:


Sec.  602.101  OMB Control Numbers.

* * * * *
    (b) * * *

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                                                            Current OMB
   CFR part or section where identified and described       Control No.
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                                * * * * *
301.6109-1..............................................       1545-2242
 
                                * * * * *
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Steven T. Miller
Deputy Commissioner for Services and Enforcement.
    Approved: April 25, 2013.
Mark J. Mazur,
 Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2013-10515 Filed 5-3-13; 8:45 am]
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