It is common to see the terms "EIN" and "tax ID number" used interchangeably. An EIN and a tax identification number, however, can have different meanings. An EIN (employer identification number) is a tax identification number, but not all tax identification numbers are EINs. "Tax ID number" is a blanket term used to describe a variety of numbers assigned by both state and federal agencies for the purpose of tax reporting by individuals and businesses. Because a request for a tax ID number has the potential to mean any number of tax ID types, understanding the different types is beneficial.
Social Security Administration Tax ID Number
The U.S. Social Security Administration issues Social Security numbers to individuals. A Social Security number (SSN) is required for federal tax filing purposes. An individual’s SSN is how both the Social Security Administration and the Internal Revenue Service (IRS) track tax returns and income information for tax law administration and Social Security benefits. An SSN is a person's taxpayer identification number. On some federal, state or employment forms, the terms "Social Security number" and "tax ID number" are interchangeable.
The IRS issues EINs to businesses. An EIN also may be referred to as a federal tax ID number. This number allows the IRS to identify a specific business entity. Certain trusts and estates that have an annual income must have an EIN. For business entities, an EIN is much like a Social Security number for an individual. In fact, an EIN is nine digits, just like a Social Security number. Rather than separating the numbers into three groups, however, an EIN is separated into a two-digit group and a seven-digit group.
Another type of tax identification number issued by the IRS is an individual taxpayer identification number or ITIN. The IRS issues an ITIN to foreign citizens and resident aliens who are unable to obtain a Social Security number. These foreigners or resident aliens have transactions such as real estate sales in the United States that require tax reporting or filing. These individuals do not maintain employment in the United States. While a Social Security number validates an alien’s ability to work in the United States, an ITIN does not. An ITIN is only for tax filing purposes.
An adoption taxpayer identification number (ATIN) is issued to adopting parents for children during a pending adoption. The adopting parents usually either do not have a Social Security number for the child yet or are unable to obtain the child’s existing Social Security number. In order for the adopting parents to claim the child as a dependent during a pending adoption, the IRS must issue an ATIN. The ATIN is a temporary number assigned to the child as an identifying number only for tax purposes.
Individuals who prepare the tax returns of other people for pay are eligible to apply for a preparer’s tax identification number (PTIN). The PTIN shows on tax returns prepared by the PTIN holder in lieu of her Social Security number. This number is generally issued to sole proprietors who otherwise would use their Social Security number as their business tax ID number. Tax preparation companies and firms are ineligible for PTINs because those entities use their EIN. The purpose of a PTIN is to provide security for the preparer’s Social Security number.
State-Issued Tax ID Numbers
States also issue tax ID numbers to businesses and corporate entities. A state-level tax ID number allows a business to report sales and usage taxes, commonly known as sales tax. Because laws for each state and municipality vary, other tax ID numbers may be issued to a business for income tax reporting at the state or local level. It is possible for a tax ID number request to imply a state-issued tax ID number, rather than the more common federal tax ID number or individual Social Security number.
- Maryland State Department of Assessments and Taxation: Tax ID Numbers or FEIN?
- IRS.gov: Taxpayer Identification Numbers (TIN)
- Social Security Administration. "Social Security Number and Card." Accessed Nov. 30, 2019.
- Internal Revenue Service. "Qualifying Child Rules." Accessed Nov. 30, 2019.
- Internal Revenue Service. "Individual Taxpayer Identification Number." Accessed Nov. 30, 2019.
- Internal Revenue Service. "Employer ID Numbers." Accessed Nov. 30, 2019.
- Internal Revenue Service. "Adoption Taxpayer Identification Number." Accessed Nov. 30, 2019.
- Internal Revenue Service. "What Every Tax Return Preparer Needs to Know about Applying for a PTIN." Accessed Nov. 30, 2019.
- Internal Revenue Service. "PTIN Requirements for Tax Return Preparers." Accessed Nov. 30, 2019.
Sandra Johnson is a freelance writer, ghostwriting for private clients since 2006, and writing for print and online publications such as Sashay Magazine. She has studied with both Kaplan and Colorado Technical universities for bachelor's degrees in both human resources and accounting. In addition to writing, Johnson also operates a small family farm in rural Georgia.