Question about EIN / Tax ID number


I

imapeppertoo

I recently went to order a couple of items from a company
and they indicated that they would require a tax ID number
to complete the sale. From my research it appears that an
individual can receive a tax number as 'sole proprietor' or
even simply as an 'individual'. It also appears that it is
free to obtain an ID number from the IRS. My thought is
that I could obtain the ID number, purchase my items, and
might not have any use for the tax ID after that.

My question is - Would obtaining the tax ID create any
additional paperwork or filing hassles on top of what I
already go through? I have no plan to start a business (at
least right now), won't have any employees, payroll, or be
selling any services. I want to make sure I go through the
proper channels, but don't want to have a big head ache with
the tax ID later on.

Thanks for any advice!
 
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P

Paul Thomas, CPA

I recently went to order a couple of items from a company
and they indicated that they would require a tax ID number
to complete the sale. From my research it appears that an
individual can receive a tax number as 'sole proprietor' or
even simply as an 'individual'. It also appears that it is
free to obtain an ID number from the IRS. My thought is
that I could obtain the ID number, purchase my items, and
might not have any use for the tax ID after that.

My question is - Would obtaining the tax ID create any
additional paperwork or filing hassles on top of what I
already go through? I have no plan to start a business (at
least right now), won't have any employees, payroll, or be
selling any services. I want to make sure I go through the
proper channels, but don't want to have a big head ache with
the tax ID later on.
There's no valid reason to get a Federal Tax ID number
(other than your SSN) for a retail consumer purchase.

Federal EIN's are reserved for business entities, employers,
non-profits and the like. If you aren't one of those, don't
get that number.

And yes, when you tell them you want a EIN, they'll be
expecting tax reports and filings for that number.

So - maybe you're trying to buy something you shouldn't be
buying.
 
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P

Phil Marti

I recently went to order a couple of items from a company
and they indicated that they would require a tax ID number
to complete the sale.
Why? The answer to that question fills the gaping hole in
your narrative, and until that's filled, no one can answer
you question.
 
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M

Mark Bole

I recently went to order a couple of items from a company
and they indicated that they would require a tax ID number
to complete the sale. From my research it appears that an
individual can receive a tax number as 'sole proprietor' or
even simply as an 'individual'. It also appears that it is
free to obtain an ID number from the IRS. My thought is
that I could obtain the ID number, purchase my items, and
might not have any use for the tax ID after that.

My question is - Would obtaining the tax ID create any
additional paperwork or filing hassles on top of what I
already go through? I have no plan to start a business (at
least right now), won't have any employees, payroll, or be
selling any services. I want to make sure I go through the
proper channels, but don't want to have a big head ache with
the tax ID later on.
EIN's can be obtained for a variety of reasons which are
listed on page two of Form SS-4 and related documentation.
If you are a sole proprietor and request an EIN, the IRS
will probably ask you every quarter about your reporting of
employee withholding, whether you have any employees or not.
Other entities may receive similar communications from the
IRS.

In the end, the EIN ties back to a social security number in
most cases, so it is mostly a privacy issue, with an
associated cost of inconvenience (given that
security/privacy vs. convenience are always inversely
related).

-Mark Bole
 
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B

Bob Sandler

I recently went to order a couple of items from a company
and they indicated that they would require a tax ID number
to complete the sale.
This sounds like a phishing scam. How are you going to pay
for the purchase? Unless the company is extending credit to
you, I can't think of any legitimate reason that they would
need your tax ID number. If they are extending credit, you
would have to give them your social security number so they
could do a credit check. If they are not extending credit, I
would find another place to buy the items.

Bob Sandler
 
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C

clj1219

imapepper...@excite.com said:
I recently went to order a couple of items from a company
and they indicated that they would require a tax ID number
to complete the sale. From my research it appears that an
individual can receive a tax number as 'sole proprietor' or
even simply as an 'individual'. It also appears that it is
free to obtain an ID number from the IRS. My thought is
that I could obtain the ID number, purchase my items, and
might not have any use for the tax ID after that.

My question is - Would obtaining the tax ID create any
additional paperwork or filing hassles on top of what I
already go through? I have no plan to start a business (at
least right now), won't have any employees, payroll, or be
selling any services. I want to make sure I go through the
proper channels, but don't want to have a big head ache with
the tax ID later on.
Did they require an EIN or a sales tax ID number? We get a
lot of calls from clients saying that a business they have
started dealing with requires a "tax number" from them and
they often wonder why another business would need their
federal EIN. Good question. Generally, what is being asked
for is a sales tax number ( or resale certificate number).
Either way, unless the deal is just too good to pass up,
which I doubt it will be since you're not in a business,
just walk away from the deal. You don't have either number
and don't truly qualify to get either number.
 
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Ernie Klein

Why? The answer to that question fills the gaping hole in
your narrative, and until that's filled, no one can answer
you question.
I wonder if the OP was confused about what tax ID number was
being requested.

It is possible that he was attempting a purchase from a
wholesale only company doing business in a state like
California where a _State_ tax ID number issued by the
Franchise Tax Board is required to purchase merchandise that
is for resale.

If the company sold directly to the end user then that
company would be required to pay the sales tax. If for
resale then the reseller (with the state tax ID number) has
to pay the tax.

Many wholesale companies only sell to resellers and always
will require the tax ID number so they will not be on the
hook for the state sales tax.
 
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D

Don Priebe

I recently went to order a couple of items from a company
and they indicated that they would require a tax ID number
to complete the sale.
Could they have been talking about a SALES TAX resale
number? Were you purchasing the kind of goods that would
normally be resold?
 
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H

Harlan Lunsford

I recently went to order a couple of items from a company
and they indicated that they would require a tax ID number
to complete the sale. From my research it appears that an
individual can receive a tax number as 'sole proprietor' or
even simply as an 'individual'. It also appears that it is
free to obtain an ID number from the IRS. My thought is
that I could obtain the ID number, purchase my items, and
might not have any use for the tax ID after that.

My question is - Would obtaining the tax ID create any
additional paperwork or filing hassles on top of what I
already go through? I have no plan to start a business (at
least right now), won't have any employees, payroll, or be
selling any services. I want to make sure I go through the
proper channels, but don't want to have a big head ache with
the tax ID later on.
It occurs to me that perhaps you were trying to buy certain
items at wholesale rather than through regular retail
outlets and this may be the reason they ask for a tax ID
number. This of course is done to ensure that their
products are not sold to the general public, but through
regular and authorized retail outlets.

OTOH, perhaps they were referring to your having a sales tax
number, thinking that maybe you were already a regular
retailer, and thus they would not have to charge you sales
tax.

Which kind of "tax ID" number were they referring to?

ChEAr$,
Harlan Lunsford, EA n LA
 
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D

DORFMONT

I wonder if the OP was confused about what tax ID number was
being requested.

It is possible that he was attempting a purchase from a
wholesale only company doing business in a state like
California where a _State_ tax ID number issued by the
Franchise Tax Board is required to purchase merchandise that
is for resale.

If the company sold directly to the end user then that
company would be required to pay the sales tax. =A0If for
resale then the reseller (with the state tax ID number) has
to pay the tax.

Many wholesale companies only sell to resellers and always
will require the tax ID number so they will not be on the
hook for the state sales tax.
I think this needs a little clarification. Sales Tax Numbers
are issued by the Board of Equalization in California. (We
have 3 separate taxing agencies, one for income tax, one for
employment tax, and one for sales and use tax).

Sellers sell to wholesale buyers who will then resell the
items to the end user. The wholesale buyer does not pay
sales tax to the seller. He eventually collects it from his
customers and pays it over to the Board of Equalization.

Sellers sell to buyers who will actually use the items. In
this case the buyer will pay sales tax to the seller. This
also includes anything sold to a wholesaler who is buying
not for resale but for his own use (furniture, fixtures,
equipment, supplies, etc.)

Linda Dorfmont E.A., CFP, CSA
 
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