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WyomingVirtualOffice.com: The Bad Idea of the Nominee EIN.
 

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EMPLOYER IDENTIFICATION NUMBER:

Every corporation must have an Employer Identification Number (EIN) to open a bank account in the USA and to file the necessary tax forms.  To obtain the EIN, this involves filing IRS Form SS-4.  A corporate director or officer may file the form online or over the telephone, fax or mail by providing key financial information such as name, address and social security number of the responsible person. 

How is this relevant to privacy?  If the client is concerned about personal liability due to industry risks, or involved in a high level of professional liability, an asset protection plan based on privacy is weak.  You're better off with a plan involving the charging order protection afforded by the Wyoming LLC rather than one based on privacy.  There are many reasons why the skin-deep privacy approach is flawed and weak.  But that doesn't stop lazy idiots from touting the nominee EIN online.

But let's cover privacy for a bit.  When you apply for a bank account for the company, the bank collects the photo ID and the SSN on the signer of the company bank account.  The bank wants ID and the SSN on the signer on the signature card.  They are required to get that.  The bank must also check with the US Treasury if you're a bad guy (on the OFAC list).

The OFAC is the Office of Foreign Assets Control and they have a list of bad guys and gals that shouldn't be opening accounts in the USA.  So, what does this mean?  This simply means that the identity of the signer on the company bank account will be shared with the US Treasury.  The bank is an instrumentality of the US Treasury itself.  So, if you're dealing with a bank, you're dealing with the US Treasury by extension--in a way.  In other words, the bank is closely tied to the US Treasury, so anything shared with the bank is really shared with the US Treasury.  Kapish?

Now, we are back to the EIN.  Since the bank and the US Treasury will know who is the signer on the bank account, then obtaining a nominee EIN is useless.  You're simply paying for a service (nominee EIN) that has no real benefit to privacy.  And those who are applying for the "nominee EIN" aren't doing you any favors.  Let's cover several of those reasons:

  • Do you know if the SSN used to apply for the EIN was stolen?
  • Did that SSN, used to apply for the EIN, involve the consent of the holder of the SSN?
  • How many EIN's are connected to that SSN?  If you're using an EIN that is also connected to hundreds to an SSN, that's connected to hundreds of other EIN's, don't you think that will be interesting to the IRS? Think of it as an EIN with an STD.
  • Do you want to be interesting to the IRS?
  • The IRS isn't fond of the nominee EIN's.  In fact, their against it.  Please read this link:
  • Who applied for the EIN is not of public record.  This is between you and the IRS.  It is private.  It is more private between you and the IRS, than you're bank account information between you and the bank. 
  • Online and other brokerage companies won't allow you to open the bank account for the company if the person who applied for the EIN doesn't match up to the person who is making the investment decisions for the business.  The online brokerage companies want to make sure that the responsible party for the EIN is the same person who makes those same investment decisions.  Therefore, obtaining a nominee EIN is contrary to your interests.

THEN WHY ARE SO MANY INCORPORATORS TALKING ABOUT A "PRIVATE" EIN or a "NOMINEE EIN"?

They want to sell a service.  And you obtain a false sense of security thinking you're being "private" from the IRS.  Or, perhaps you think that your privacy from the IRS is also privacy from private creditors that have nothing to do with the IRS.  If you're the signer on the account, then you're identifying yourself to the IRS through the bank.  That nomnee EIN cost you money and you got a whole lot of nothing out of it.

If someone applies for an EIN on your behalf, they should do it as an intermediary to sell a service.  You pay for an EIN service for convenience.  They should be using your SSN anyway, or they can use the EIN of another company you own or control.  This is to identify you as the responsible person for the company.  If you use an intermediary to apply for the EIN they are doing it on your behalf and you, or some other business, should be identified. 

The bottom line is that an EIN obtained through a nominee, using the nominee's SSN, is asking for trouble.  On the proper side, an EIN obtained through an intermediary who identifies you anyway, as the responsible party, is just fine.

WHERE DO I APPLY FOR THE EIN ONLINE WITH THE IRS?

https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online

ARE YOU TAX ADVISERS?

NO.

WHAT ABOUT AN AGED EIN FOR CORPORATE CREDIT?

EIN's are randomized numbers.  You, or any other private party, cannot tell the age of the EIN by looking at the number.  The EIN is not a serial number (...426, ...427, ...428).  The EIN is a random number.   Therefore, any person on the street cannot look at the EIN and determine when it was obtained.

If you obtain a company with an "aged EIN" then consider the possibilities:

  • Did they file the tax returns?
  • Did they file the tax returns on time?
  • Were the tax returns truthful?
  • Were the tax returns accurate?
  • Were they pay the IRS the amount owed?
  • If the company has an aged EIN, are there any outstanding debts, loans or other liability you don't know about?

ALL OF OUR COMPANIES ARE WITHOUT AN EIN.

This means that after you acquire the company, you'll need to file for a new EIN because there was no previous EIN history.  This is also security that the company wasn't able to open any accounts, or apply for a loan.  It is important to know these things.  A company without an EIN is more secure than a company with an EIN.

The above said, it is interesting that many incorporators will charge you extra for a Nominee EIN or if the company already has an EIN.  Why take the risk?

WHEN DOES A CORPORATION NEED TO APPLY FOR A NEW EIN?

The corporation may apply for a new EIN when the business starts, or when there are new owners or new responsible parties.  There may be other reasons.

WHAT ABOUT A CORPORATION?  WHERE'S THE PRIVACY?

Again, the signer on the bank account is known to the bank, and by extension, the US Treasury.  As long as you're seeking privacy from privacy parties (not the IRS), the privacy is found here:

  • No connection to the public record when using a Contract Officer to serve on the public record in your place. 
  • Your application for the EIN (using your SSN) and for the bank account (your SSN and your photo ID) is private from the public record.
  • Your holding of shares of a corporation is personal property.  You may need to disclose your stock ownership on your tax return or the tax return of the corporation.
  • The State of Wyoming doesn't request information on the owners of a Wyoming corporation or Wyoming LLC.
  • The State of Wyoming doesn't require that the registered agent list where the stock ledger may be found.

WHAT ABOUT AN LLC?  IS THERE ANY VALUE TO GET A PRIVATE EIN?

An LLC taxed as a partnership is associated to your SSN anyway, if you're a member.  The partnership return for the LLC is a 1065 return and the members are disclosed with their name, SSN's and percentage of ownership.  And further, the members (owners) also disclosed this information on their personal income tax returns.  Therefore, there's NO benefit in obtaining a nominee EIN.  There's no real privacy because the LLC will be associated with your social security number anyway with the K1 filing.  The K1 is attached to your 1040 return that links you to the LLC itself.

SINCE I AM LINKED TO THE LLC, WHERE'S THE ASSET PROTECTION?

The Wyoming LLC extends an excellent level of protection from private threats to your property interests.  The Wyoming LLC doesn't work against the IRS.  In fact, nothing works against the IRS in terms of asset protection.

As for protecting yourself from private threats (after a private party sues you), the Wyoming LLC is effective when there are at least two members, the LLC is manager managed and it is taxed as a partnership.  There are other aspects of the LLC that go into play.  The operating agreement must include certain attributes to protect the interests of the members.  The articles of incorporation must match the operating agreement, but not reveal too much.  The resolutions of the LLC must work with the filed articles of organization and the operating agreement of the LLC.  Please call us at 307.237.2580 to discuss this further.

We sell aged companies to enhance your business plan.  It has nothing to do with privacy.  For a list of aged shelf companies to assist you in building a real business, enhance limited liability, and to expand your options, please email us at Assetprofile@gmail.com.  Sorry, we don't provide nominee EIN's.

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