Introduction: What is IRS Publication 1635?

IRS Publication 1635, titled Understanding Your EIN: Employer Identification Number, is an official informational guide published by the Internal Revenue Service. It serves as the definitive reference manual for understanding, obtaining, and managing an Employer Identification Number (EIN).

An EIN is a unique nine-digit tax identification number formatted as XX-XXXXXXX. Just as an individual citizen uses a Social Security Number (SSN) for personal identification and tax tracking, business entities, non-profit organizations, estates, and trusts use an EIN to identify their tax accounts with the federal government. Publication 1635 explains the full lifecycle of this vital number.

This publication explains which businesses are legally required to have an EIN, how to apply for one directly from the IRS for free, and what changes in your business structure require a brand-new number. It provides critical clarity for entrepreneurs, preventing costly administrative delays when opening commercial bank accounts, hiring employees, or filing federal returns.

Who Should Read This Publication?

Publication 1635 is designed for anyone forming a new business, restructuring an existing company, or managing fiduciary tax accounts. You should consult this guide if you are:

New Business Owners and Entrepreneurs: Individuals launching sole proprietorships, limited liability companies (LLCs), partnerships, or corporations.
Employers Hiring Workers: Business owners who are hiring their first employee and must begin withholding federal payroll taxes.
Estate Executors and Trustees: Fiduciaries administering a deceased person’s estate or managing an irrevocable living trust that requires an independent tax identity.
Nonprofit and Community Organizers: Leaders establishing charities, religious organizations, clubs, or social welfare groups seeking tax-exempt status.
Self-Employed Freelancers: Independent contractors looking to protect their personal privacy by using an EIN instead of their personal Social Security Number on Form W-9.

Key Topics Covered in Publication 1635

Publication 1635 covers every stage of establishing and managing an employer tax identity. The primary topics covered include:

The Legal Purpose of an EIN: Why federal tax law requires separate identification for commercial and fiduciary entities.
Mandatory Identification Triggers: Specific business activities and legal structures that legally require an EIN.
Application Channels: The safe, legitimate, and free methods to apply for an EIN via the IRS online portal, fax, or mail.
When You Must Obtain a New EIN: Structural transformations (such as converting from a sole proprietorship to a corporation) that cancel your old number.
When Your Existing EIN Remains Valid: Routine corporate changes (such as name or address updates) that do not require a new application.
The Responsible Party Mandate: Rules requiring an individual person to be named as the controlling officer of the entity.

Detailed Breakdown of Main Concepts

1. Who Is Legally Required to Have an EIN?

Not every small business requires an EIN. A sole proprietor with no employees who files a standard Schedule C with their personal Form 1040 can generally use their personal Social Security Number.

However, Publication 1635 outlines specific statutory triggers that make an EIN legally mandatory. You must have an EIN if you:

Have employees and pay wages subject to federal withholding.
Operate your business as a corporation or a partnership.
File employment, excise, or alcohol, tobacco, and firearms tax returns.
Withhold taxes on income (other than wages) paid to a non-resident alien.
Maintain a Keogh retirement plan or solo 401(k).
Administer an estate, trust, non-profit organization, or farmers’ cooperative.

2. How to Apply for an EIN (The Free Methods)

Publication 1635 emphasizes that the IRS issues Employer Identification Numbers completely free of charge. Business owners should avoid third-party websites that charge commercial fees to submit an application on their behalf.

The fastest and most common method is the IRS Online EIN Application tool on IRS.gov. Once the interview-style application is completed, the nine-digit number is generated and issued immediately. Alternatively, applicants can complete paper Form SS-4 and submit it by fax (processed within approximately four business days) or by mail (taking four to five weeks). International applicants without a U.S. legal residence can apply by telephone via a dedicated international line.

3. When You MUST Get a New EIN

A business cannot simply keep its existing EIN when its foundational legal structure changes. Because the IRS associates each number with a specific legal entity type, structural transformations require applying for a brand-new EIN.

Publication 1635 provides clear rules for when a new number is required:

Sole Proprietorships: You must get a new EIN if you incorporate, form a partnership, purchase or inherit an existing business, or declare personal bankruptcy.
Corporations: A new EIN is required if the corporation receives a new charter from the state, becomes a subsidiary of another corporation, or converts into a partnership.
Partnerships: You need a new number if you incorporate, if one partner takes over and operates as a sole proprietor, or if the partnership dissolves and forms a new partnership.
Estates and Trusts: A new EIN is required when a revocable living trust converts into an irrevocable trust upon the death of the grantor, or when an estate creates a separate testamentary trust.

4. When You Do NOT Need a New EIN

Entrepreneurs frequently apply for a new EIN when they do not need one, creating confusing duplicate accounts in IRS databases. Publication 1635 clarifies that routine operational updates do not change your legal identity.

You keep your existing EIN if you change your business trade name, move to a new physical address, or open new branch locations. Corporations do not need a new EIN if they file for corporate reorganization, change their corporate name, or elect S Corporation tax status using Form 2553. Partnerships retain their EIN if they change their partnership name or location.

5. The “Responsible Party” Requirement

To enhance federal transparency and prevent the use of anonymous shell entities, the IRS requires every business applying for an EIN to disclose a designated “Responsible Party.”

Under Publication 1635 rules, the responsible party must be a natural individual person (not another company or entity) who ultimately owns, controls, or exercises primary operational authority over the entity’s funds and assets. The responsible party must provide their personal Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). If the responsible party changes in the future, the business must notify the IRS within 60 days using Form 8822-B.

6. Closing an EIN Account vs. Canceling a Number

Taxpayers often contact the IRS asking to “cancel” or delete an EIN when a business closes. Publication 1635 explains that an EIN is a permanent federal identifier that is never deleted, canceled, or reassigned to another business.

Instead, the IRS allows you to “close your business account.” To close an account, the business must file all final federal tax returns (such as a final Form 941 or Form 1120), pay any outstanding tax balances, and mail a formal letter to the IRS stating the reason for closure, the legal business name, address, EIN, and a copy of the original EIN assignment notice.

Practical Examples and Scenarios

Scenario 1: Sole Proprietor Incorporating for Growth

Alex operates a freelance plumbing business as a sole proprietor, using an EIN to open a commercial bank account. After two years of growth, Alex decides to protect personal assets by incorporating the business as a formal state corporation and hiring two apprentice plumbers.

Under Publication 1635, Alex cannot continue using the original sole proprietorship EIN. Incorporating creates a completely new legal entity under state and federal law. Alex completes an online application on Form SS-4 and obtains a brand-new corporate EIN to use for payroll filings and the new corporate tax return.

Scenario 2: Business Relocation and Trade Name Change

A partnership operating a neighborhood coffee shop called “Harbor Cafe” decides to rebrand as “Harbor Roasters” and moves into a larger building across the street.

The partners wonder if they must obtain a new EIN for their lease and banking updates. Referring to Publication 1635, they find that changing a business name or moving to a new address does not create a new legal entity. They keep their existing EIN, report the address change to the IRS on Form 8822-B, and note the legal name update on their next partnership tax return (Form 1065).

Comparison: When a New EIN Is Required vs. Retained

Business Event	Entity Type Affected	New EIN Required?	Publication 1635 Action
Incorporating Business	Sole Proprietorship / Partnership	Yes	Apply for new corporate EIN via Form SS-4
Changing Trade Name	Any Entity	No	Notify IRS on next annual tax return
Moving to New Address	Any Entity	No	File Form 8822-B within 60 days
Electing S Corp Status	Corporation / LLC	No	File Form 2553; keep existing EIN
Buying Out Partner (Sole Owner)	Partnership	Yes	Partnership ends; sole owner needs new EIN
Opening Branch Location	Any Entity	No	Existing corporate EIN covers all locations

How This Publication Relates to Specific Forms

Publication 1635 connects directly to several essential IRS tax forms and administrative documents:

Form SS-4 (Application for Employer Identification Number): The foundational IRS application form used to request an EIN by paper, fax, or online interview.
Form 8822-B (Change of Address or Responsible Party – Business): The mandatory notification form businesses must file within 60 days of changing their physical address or designated responsible party.
Form 2553 (Election by a Small Business Corporation): Used by corporations or LLCs to elect S corporation status, which does not require a new EIN.
Form 8832 (Entity Classification Election): Used by eligible entities (like LLCs) to choose how they wish to be taxed without altering their basic EIN status.
Form W-9 (Request for Taxpayer Identification Number and Certification): The document independent contractors and vendors complete to provide their EIN to commercial clients.
Annual Tax Returns: Including Forms 1065, 1120, 1120-S, 941, and 940, all of which require a valid EIN to process correctly.

Common Misunderstandings Clarified

Because an EIN is used across banking, state licensing, and federal taxation, several misconceptions frequently arise:

“There is a government fee to obtain an EIN.” Getting an EIN from the IRS is 100 percent free. Any commercial service charging fees is simply submitting the free IRS online application on your behalf.
“Changing your business name requires a brand-new EIN.” Updating your company name or moving to a new office does not require a new number. You keep your number and report the changes using Form 8822-B and your annual return.
“Electing S Corporation status cancels your EIN.” An LLC or traditional C corporation electing S Corporation tax treatment under Form 2553 keeps its existing EIN. The election changes tax treatment, not the underlying legal entity.
“You can cancel an EIN so it disappears from the system.” The IRS never cancels or deletes an EIN. The agency closes the business tax account, but the number remains permanently tied to that entity to prevent identity theft.

Why This Publication Matters for Taxpayers

An Employer Identification Number is the cornerstone of commercial identity in the United States. Without an EIN, a business cannot hire employees, open commercial checking accounts, establish merchant processing lines, or bid on corporate contracts.

Publication 1635 is vital because it prevents costly legal and operational mistakes. Operating under the wrong EIN or failing to obtain a new one during a corporate reorganization can cause payroll tax payments to mispost, freeze bank accounts, and trigger automated IRS penalty notices. Furthermore, for sole proprietors and freelancers, understanding Publication 1635 provides a simple path to safeguarding their personal identity by replacing their Social Security Number on public business invoices with a dedicated EIN.

Frequently Asked Questions

How long does it take to get an EIN?

If you apply online via IRS.gov, your EIN is issued immediately upon completing the application. Applying by fax takes approximately four business days, while applying by mail takes four to five weeks.

Can a sole proprietor get an EIN if they have no employees?

Yes. A sole proprietor with no employees can obtain an EIN. Many freelancers do this to protect their personal privacy by putting their EIN on Form W-9 instead of their personal Social Security Number.

What should I do if I lose or misplace my EIN?

You can locate your EIN by reviewing the original CP 575 confirmation notice sent by the IRS, checking past filed business tax returns, or contacting the bank where you opened your commercial account. You can also call the IRS Business & Specialty Tax Line at 800-829-4933.

Who can be listed as the “Responsible Party” on an EIN application?

The responsible party must be a natural human person who ultimately owns, controls, or manages the entity. They must have a valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).

Does a single-member LLC need an EIN?

If a single-member LLC has employees or must pay excise taxes, an EIN is mandatory. If it has no employees and files as a disregarded entity on the owner’s personal return, it can use the owner’s SSN, although most commercial banks still require an EIN to open an LLC bank account.

Can an EIN be transferred to a new owner when a business is sold?

No. An EIN is permanently assigned to the original entity. When an individual buys an existing business or takes over a sole proprietorship, the new owner must apply for their own new EIN.

Conclusion: Key Takeaways

IRS Publication 1635 provides the essential guidelines for managing an Employer Identification Number. When establishing or restructuring a business, keep these fundamental takeaways in mind:

An EIN is a permanent, nine-digit federal tax identifier issued by the IRS completely free of charge.
An EIN is legally mandatory if you have employees, operate as a corporation or partnership, or file federal employment or excise tax returns.
Structural transformations—such as incorporating a sole proprietorship or changing a partnership—require applying for a brand-new EIN.
Routine changes—including business name updates, address relocations, and S Corporation elections—do not require a new number.
Every entity must name a natural individual person as its Responsible Party and update changes within 60 days using Form 8822-B.

IRS Publication 1635 Guide: Employer Identification Number