W9 Question: What happens if Single Member LLC EIN on form??

[RyanCScott]

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@AmeliesUncle wrote:

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LOL.  Apparently you don't have much experience with calling the IRS.  It is common to call three times and get three different answers.

The IRS directs you to do that.  From an income tax viewpoint, the LLC does not exist.  As I've pointed out twice before, yes, an EIN in your name is completely different than an EIN in the LLC's name.

I've seen the IRS send out mismatch notices for not following the directions on the W-9, such as using the LLC's EIN and your name on line 1.

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You're right, I don't call the IRS that often. I'm going to call back for clarification to see if I get the different answers that you're talking about. If I get the same answer and it matches the accountant, I plan to go with the professionals' advice.

You're also right that there would be a mismatch with using your own name on line 1 and an LLC EIN on the W9. That's why they've all recommended using your business information. Using my LLC name on line 1 and LLC EIN under Part I will match my tax return. I think that getting information that matches is all that the IRS is concerned with, and your client wants to know if they're doing business with you personally or an LLC. And yes, a sole proprietor EIN and an LLC EIN are different. I don't have (and it looks like I can't get) a sole proprietor EIN, I don't want to do business as just a sole proprietor, and I won't use my SSN, so I don't have much choice besides using my LLC info. I'm interested though, what happened after a mismatch notice was sent out? Were there any penalties, or did the person/LLC just correct the information?

[Anonymous]

So I'm a little confused here as to what to do. What did you finally do? Use your SMLLC's name and EIN or your name and the SMLLC's EIN on the W-9?

Also AFAIK you can only get an EIN for a LLC. I started as a Multi Member LLC with an S-Corp election with the EIN was issued. The S-Corp election was revoked and it is now a Single Member LLC. I'm guessing  the EIN is still valid and tied to the LLC. So I'm trying to understand what do enter in the W-9. 

This article seems to suggest entering my name with my LLC's EIN: https://www.upcounsel.com/filling-out-w9-for-llc

The IRS website seems to suggest that I will need a new EIN number after changing from Partnership to a Sole proprietorship: https://www.irs.gov/businesses/small-businesses-self-employed/do-you-need-a-new-ein

Technically my LLC changed from Multi Member to Single Member, but is still an LLC - however it is taxed as a sole proprietorship. Does this mean I cannot continue to use my EIN after changing from MMLLC to SMLLC?

This site seems to state that no new EIN is required when moving from MMLLC to SMLLC: https://www.llcuniversity.com/irs/ein-responsible-party-for-llc/

Open to advice and thoughts.

[RyanCScott]

I'm using my LLC's name on line 1 and EIN number for the LLC, but you shouldn't follow online advice. I talked to an accountant and the IRS. You need to get professional advice about the change from multi-member to single member LLC. They can also advise you on fililng out the W9. 

[AmeliesUncle]

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@Anonymous wrote:

Use your SMLLC's name and EIN or your name and the SMLLC's EIN on the W-9?

The S-Corp election was revoked

Did you read what the Instructions for the W-9 ask you to do?

If you merely "revoked" the S-election, it is now taxed as a C-corporation.   Or did you file (and qualify for) form 8832 to be taxed as a disregarded entity?

[Anonymous]

Revoked and filed 8832 to be taxed as sole proprietorship as I mentioned above. (Digressing slightly: This website does a brilliant job to explaining the steps to revoke and fix the tax elections. https://www.llcuniversity.com/irs/llc-revoke-s-corp-election/#your-llcs-revocation-of-s-corporation-...)

the w-9 instructions are vague at best and at odds with everything else I’m reading and hearing. So I’m looking to see what others are doing and an open to suggestions and thoughts. 

[Anonymous]

@RyanCScott are you a SMLLC with an EIN against your LLC or EIN against your Sole proprietorship? This whole EIN against LLC vs Sole proprietor is also very confusing. How does one even tell what the EIN was issued against?

[Xactor]

Just to chime in and give a more recent answer . . . the owner of a single-member LLC was under the impression that since the letter they received from the IRS to assign their LLC's EIN said that it could be used to identify them, they should be able to use the LLC's EIN instead of their SSN on the W9.  I could definitely see the confusion; therefore, I decided to call the IRS yesterday to see if anything had changed from the instructions, which says a single-member LLC must use their SSN (or their own EIN) - NOT their LLC's EIN on the W9.

Interestingly, I got a completely different answer from the one RyanCScott received when they called the IRS. The answer I received from the IRS rep aligned with AmeliesUncle's responses, the W9's instructions and the IRS web site. It didn't seem to matter that the single-member LLC's letter from the IRS that assigns the LLC's EIN says the number can be used to identify them.  

The rep reiterated . . . 

If it's a single-member LLC, the OWNER's name goes on Line 1 (NOT the LLC's name - the rep said that was incorrect, because the tax return that is filed for a single-member LLC is the 1040, and the name used on that form would be the owner's name - not the LLC . . . the name in this field must match what is on the tax return). 

Single-member LLC's name goes on Line 2.

On Part I, the TIN must match up to the name on Line 1, which in the case of a single-member LLC is the owner's name. Therefore, unless the owner has their own EIN, the TIN they must give is their SSN - NOT the LLC's EIN if they are a single-member LLC/disregarded entity.  

Single-member LLCs do not file a separate tax return from their owners, unlike LLCs taxed like a corporation.  Single-member LLCs are pass-through entities only, and as such, all income and expenses are ultimately reported on the 1040 under the owner's name and SSN - not the LLC's name and LLC's EIN.   

I was told to reject the W9 I received with the single-member LLC's EIN and told to tell the owner to resubmit the form with their SSN since they only had an EIN for their single-member LLC.  While the IRS rep was not opposed to the person including their LLC's EIN on the W9 if they really insisted on it, she said the owner must also include their SSN per the instructions - and the SSN would be the number I would use when issuing the 1099.

The IRS rep encouraged me to tell the owner of the single-member LLC to call them if they were still confused - or if that person's accountant or tax attorney was advising them differently.

If anyone wants to call and see if they get another answer, the correct IRS number to call about this topic is (800) 829-4933. They are open from 7am-7pm (I'm guessing M-F).

[RyanCScott]

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@Xactor wrote:

Interestingly, I got a completely different answer from the one RyanCScott received when they called the IRS.

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You're right I got a very different answer from the IRS, and from the accountant. I'm surprised that this thread is still going. Everyone should just to talk to tax professionals and go by their advice, and not follow what that they read online. The IRS has your name and SSN linked to your LLC name and its EIN. It's all on your taxes together, so they said it can be matched to you. I'm not giving out my SSN, so a W9 with my LLC name and LLC EIN is the option that I'm using (and what I was told to do). I haven't had any issues. If anyone feels comfortable giving out their SSN to other businesses and doesn't see any risks though, they can use that option. If there is an issue with any of this, all of your information is on file with the IRS.

[pk]

@RyanCScott ,   having gone through most of this thread, I would just like to point out  that 

(a) a single member LLC is by default treated as a dis-regarded entity i.e.  it has no existence separate from the owner -- therefore you use  your own SSN and schedule-C for filing a return.   However  a single member LLC can  choose to be treated as a C-Corp or S-corp   -- but you have take the extra step to  request that treatment.

(b) EIN for an LLC  is a different matter -- it has to do with whether you have employees --- it is Employer Identification Number ---  it is used for  depositing the employee  withholdings etc., even in the case of  a dis-regarded entity.  It is not directly connected to whether you are a disregarded entity or an entity.

(c) I totally support the thought process that when you start your business  and/or at major changes , you should consider discussing / accounting methods / your  options/ plans etc.  with a tax professional or a tax attorney  and structure your book-keeping and entity characteristics correct.

 Hope this  helps  

pk

[RyanCScott]

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@pk wrote:

@RyanCScott ,   having gone through most of this thread, I would just like to point out  that 

(a) a single member LLC is by default treated as a dis-regarded entity i.e.  it has no existence separate from the owner -- therefore you use  your own SSN and schedule-C for filing a return.   However  a single member LLC can  choose to be treated as a C-Corp or S-corp   -- but you have take the extra step to  request that treatment.

(b) EIN for an LLC  is a different matter -- it has to do with whether you have employees --- it is Employer Identification Number ---  it is used for  depositing the employee  withholdings etc., even in the case of  a dis-regarded entity.  It is not directly connected to whether you are a disregarded entity or an entity.

(c) I totally support the thought process that when you start your business  and/or at major changes , you should consider discussing / accounting methods / your  options/ plans etc.  with a tax professional or a tax attorney  and structure your book-keeping and entity characteristics correct.

 Hope this  helps  

pk

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I understand everything you're saying. Comments in threads like this can give advice based on personal experience, but they should be geared towards directing people to contact tax professionals on their own. Any other discussion just leads to more confusion, which is all that I saw online before I contacted someone. I got a second (and third) opinion, and I'm going by that advice.

The main point that I received though is that the IRS has all of your information on file. Your SMLLC info isn't separate from your name and SSN, they're tied together and all listed on your taxes. If someone is comfortable with giving businesses their SSN though, they can do that. The fact that this thread keeps going makes me think that people see this as a larger issue than it is. I can post here if I have any issues in the future just as an update, but everything's good. The bottom line is I want to protect my SSN, and I'm comfortable with the advice I was given.

[cory1848]

I have been fighting this for years. I have been given multiple answers on how to handle this from a number of CPAs, and calling the IRS. 

I started as a multiple member LLC. First year filed the 1065 partnership return then my partner decided to leave the business. Ever since then I have had issues withe the EIN and W9 forms. I filed form 8832 for change update years ago. I assume that went through. My current CPA says not to worry about it as its all tied together like you say. I am actually not sure what entity type I am now according to the IRS. From what I read, once a member leaves, you are technically a SMLLC, however your EIN won't reflect that. 

The IRS instructions for Do you need a new EIN? contradict themselves. A MMLLC by IRS definition is a partnership. When a partnership moves to a single member, a new EIN is needed. However, under the LLC section, it says its not needed when moving from multiple members to single member. A partnership can be stand alone like a sole prop, but it can also be an LLC. There is no clarification under the LLC section of changing an EIN about that. I can't apply for a new EIN or change of status as it errors out with the LLC name being the same.

To date, I haven't gotten any kick back from the IRS about this. However the issue that comes into play is with TIN verification on W9 forms.  Stripe is one offender that will not accept either my personal EIN or LLC EIN. My personal EIN matches to my name, and my LLC EIN matches to the LLC name, not mine. Another client of mine is kicking it back as well. If I put my name on the W9 line 1 and my business name on line 2, they don't match and it fails. 

Like Ryan, I do not want to give out my SSN and any form I give to a business should reflect my business name, as they are dealing with a business, not an individual person. I have been using my personal EIN with my name but for 2024 I am switching it back to my business name. I will let the IRS figure out if I am a SMLLC or a regular LLC. This will go against the instructions on the W9, however until they further clarify, this seems to be the only way to protect my SSN while passing TIN verification.

[mmollly]

@RyanCScott I just found this thread and was wondering if you ever ran into any issues with the W-9s that listed your LLC name and EIN. I have a SMLLC that's treated as a disregarded entity and would really like to stop putting my SSN on W-9s for security. 

At tax time, I assume you were issued 1099s in the name of your LLC rather than your own name. Did you have any trouble filing on your own returns? 

[cory1848]

Update on my situation. I have recently moved to another state and while I could migrate the business over and keep the business intact and the EIN problems that go with it, I have decided to dissolve the business in my old state and reopen as a new business in the state I just moved to. I have already filed for a new LLC and received a new SMLLC EIN.  I will be closing out 15 years of records by doing this but it is what it is. I had planned on changing the name of the LLC anyways, so figured this was the time to do it. Hopefully this solves my issues moving forward with TIN verification and the likes.  

[pk]

@cory1848 , having read through this long thread, I am not sure I understand the  trials and tribulations  the posters have faced. I must be missing something.   My understanding of the situation ( in a perfect world :( 

1. Single Member LLC  ( SMLLC )  default status is a dis-regarded entity  for tax purposes.

                 a.  For tax filing  the owner uses his/her SSN,  entity name  etc. on Schedule-C

                 b.  For all other purposes  ( banking ,  payments / receivables etc., employee - W-2s, withholding deposits etc. ) he/she should use the EIN.

2. Multimember LLC ( MMLLC ) is by default a partnership and therefore  EIN is used everywhere including  K-1 .

3. If there is a change  it.  from SMLLC to MMLLC  or vice versa, one should get a new  EIN and this should be reflected  in the filings including tax filings.

So can you explain now why you had such  trouble with  TurboTax in this ? 

Or am I out in left field and really do not understand the issue ?

[cory1848]

It's not really an issue with TT. It is an issue with the W9. I will try and sum it up for you

1. a. - The issue is using ones SSN on the W9 as opposed to using a personal EIN or the LLC EIN.  I do a lot of contract work. It is not unusual for me to receive 8-10 1099's every year. That is 8-10 companies I submit a W9 form to. I am not giving out my SSN to that many companies for business work. So I use a personal EIN which passes TIN verification.  

1.b. - Yes, no misunderstanding here. 

2. No misunderstanding here. 

3. This is where is gets confusing and there is misinformation among the IRS itself, and among tax professionals. IRS states that if there is a change to a partnership where one partner leaves and the entity becomes one owner, a new EIN should be issued. But then is states under the LLC instructions, that if a MMLLC becomes  SMLLLC that a new EIN is NOT needed as the EIN follows the entity.  Now the IRS states that an LLC is a state entity and is not recognized for tax purposes. Yet when you sign up for an EIN, it asked if you are an LLC and the instructions differ from MMLLC and partnerships, which according to the IRS, should be the same. 
My issue with the EIN was it was originally applied for as a MMLLC. My partner left leaving only me. 4 different CPAs told me it doesn't matter, everything is tied to my SSN anyways which is true. The IRS instructions seemed to support that. I have no issues filing taxes. However, the business name tied to the EIN (what you put on line 2 on the W9) causes TIN verification to fail. If a company is running a TIN check, they check the company name against the EIN as well as my personal name. EIN should only need to be verified agains the owners name (line 1) however companies use the business name to issue checks too and if it all doesn't match, it gets rejected. 

I have tried applying for a new EIN as well and the process was rejected stating the entity already exist. So I am giving up and starting over with no issues moving forward. Putting this crap behind me.