Letter to the IRS re: EIN application process

Dear Chief Executive Officer Bisignano:

As the Internal Revenue Service (IRS) reviews its regulations to ensure they reflect "the best reading of the underlying statutory authority," the American Bankers Association (ABA) urges the agency to revisit and refine the Employer Identification Number (EIN) application process.

Hoping to make its EIN application process more secure and transparent, the IRS announced in 2019 that it would no longer recognize any private sector entity as a "responsible party" for purposes of Form SS-4 (EIN application). Effectively prohibiting a private sector entity from using its corporate name and existing corporate EIN to obtain a new EIN for another private sector entity makes good sense in many contexts. One can imagine bad actors attempting to conceal a litany of financial crimes among a roster of corporate names and corporate EINs carefully nestled one inside the other like so many nesting dolls.

However, as it applies to banks, savings associations, and non-depository trust companies (collectively, "banks"), the 2019 change plainly made the EIN application process less secure and less transparent and should be amended accordingly.

Due in large part to the fact that they are closely supervised by state and federal agencies, banks are regularly asked to assume a fiduciary role as trustee of a trust or executor of an estate. And, often, before it may open a bank account or file a tax return for a trust or estate client, a bank must obtain a new EIN for the client. The issue also arises upon the death of a decedent who owned a single-member LLC, which was disregarded for tax purposes during the decedent's life. Upon death, the LLC often passes to multiple trusts, and a first EIN must be obtained for the entity.

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