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For many Americans, starting a business represents independence, opportunity, and the chance to contribute to their communities. But before they can open a bank account, hire employees, or file taxes, they need one thing from the IRS: an Employer Identification Number (EIN).
Unfortunately, too many taxpayers encounter obstacles in obtaining an EIN. The process, which should be straightforward, can be marred by delays, technical glitches, and inconsistent procedures that frustrate both taxpayers and tax professionals.
Taxpayers applying online must complete the application in a single session that times out after 15 minutes of inactivity. Applicants may have to try several different web browsers to get the application to go through. Only one EIN may be issued per responsible party per day. Applicants outside the United States cannot use the online system at all, forcing them to mail or fax Form SS-4, Application for Employer Identification Number, which is a process that can take four weeks or more.
Even when taxpayers follow the rules, they frequently encounter error codes that require IRS intervention. For example, a mismatch between the responsible party’s name and Social Security number may stop an application cold, even if the taxpayer’s records are correct. Other codes reflect system overloads, instructing applicants to “try again later.”
Delays compound the problem. Backlogs in manually processing EIN applications leave businesses unable to open accounts or begin operations. In some cases, taxpayers report receiving EINs they never requested – raising concerns about errors or identity theft.
Getting an EIN letter can be more complicated than expected. The EIN letter is often what is used for opening a bank account and other start up processes. If a taxpayer is successful in completing the online application, they can choose to download their correct series of CP 575, Employer Identification Number (EIN) Assignment Notice, confirming the receipt of their EIN. However, if they do not download it or have any technical issues, they must wait one month before requesting a 147C EIN verification letter, creating further obstacles to timely business startup.
The IRS has long emphasized taxpayer compliance and the need for timely filing. But when taxpayers cannot even begin the process of establishing their businesses because of systemic barriers, we risk discouraging entrepreneurship and eroding trust. Small business owners – who form the backbone of our economy – should not be forced to wait weeks for something as fundamental as an identification number.
To serve taxpayers effectively, the IRS must modernize its EIN application process. That means:
Just as importantly, taxpayers must be protected from scams. Unscrupulous websites often charge fees for EINs that the IRS issues free of charge. Clearer guidance and more prominent public outreach can help taxpayers avoid falling victim to these schemes.
An EIN should be a gateway to economic opportunity, not a barrier. The IRS must ensure that this critical process is efficient, transparent, and accessible to all. When taxpayers can quickly and easily obtain an EIN, they can focus on what matters most: building their businesses, supporting their families, and strengthening their communities.
The views expressed in this blog are solely those of the National Taxpayer Advocate. The National Taxpayer Advocate presents an independent taxpayer perspective that does not necessarily reflect the position of the IRS, the Treasury Department, or the Office of Management and Budget. NTA Blog posts are generally not updated after publication. Posts are accurate as of the original publication date.