Is there a penalty for applying for an EIN late?
The application itself is not a return with its own filing date, so the delay is not charged as a late filing penalty on the form. What the delay costs is everything waiting behind the number. An entity cannot make a withholding or information return in its own name without one, and the returns it has missed do have deadlines of their own. The exposure therefore attaches to those filings rather than to the application, and the way to reduce it is to obtain the number and then bring the outstanding filings up to date as one sequence.
We have traded in the US for a year with no EIN, what now?
Work in two stages. First establish which US filings the entity should have made, because the withholding and information returns follow from the payments it made and received rather than from whether it earned a profit. Then apply for the number, since those returns are identified by it and cannot be filed without it. Bringing the missed filings forward as one set, with a consistent explanation of the delay running through them, is better than sending them piecemeal as the number arrives. Expect the slower application channel if no officer holds a US social security number.
Can we open a US bank account while the EIN application is pending?
Assume not, and plan on that basis. The number is the entity's identifier, and the bank account, the payroll registration and the withholding filings all hang off it. That is why a late application is not a small administrative slip for a foreign-owned structure. It is the first scheduling constraint of the whole expansion, and every date set downstream of it moves when it moves. If dates have already been promised, say so in writing to the parties relying on them rather than waiting to see whether the number arrives in time.
Does a late EIN application make our payroll filings late too?
The payroll filings have their own dates and those dates do not move because the number is missing. That is the sting in a late application. The entity carries on accruing filing obligations it has no way to discharge in its own name. Deal with the two things separately. Apply for the number without waiting for the payroll position to be resolved, and at the same time work out exactly which filings fell due while you were without it, so they can go in as soon as the number exists.
Why can we not just use the parent company's tax number instead?
Because the filer is the entity with the obligation. A US entity, or a foreign entity with US withholding or filing duties, is identified by its own employer identification number, and returns made under a related company's number are recorded against that company. Unpicking that afterwards is harder than the wait would have been. The filings have to be identified, withdrawn or corrected, and the two companies' histories separated. If returns have already gone out under the wrong number, treat that correction as part of the same exercise rather than a later one.
Our SS-4 has been pending for weeks, should we send another one?
Sending a second application is how entities end up with two records and a filing history that does not add up. Before applying again, check whether the first application reached the right place and whether the details on it would be accepted. The person named as responsible for the entity has to be someone with authority over its funds, and a mismatch there is a common reason an application goes nowhere. If a second application does prove necessary, keep a record of both so the unused one can be closed out.
What is a double tax treaty and what does it actually do?
It is an agreement between two countries that divides up the right to tax. Article by article it decides which country taxes employment income, dividends, interest, royalties, pensions, property and business profits — and where both may tax, it caps what the source country can withhold and tells the other to give credit. It also breaks residence ties and opens a government-to-government channel for disputes. What it never does is apply itself: a treaty position is claimed. See our treaty work.
Do I get credit for all of the foreign tax I paid?
Only up to your own country's tax on that same income, and only for tax you were legally obliged to pay. Two consequences follow. Living somewhere that taxes you more heavily than your residence country does leaves an excess that becomes a carryover rather than a refund. And withholding suffered above the treaty rate is not creditable — the route back to that money is a refund claim in the country that took it. See claiming the credit.
