IRS Clarifies Their Position on Use of Nominees for FEINs
The IRS has Released a Bulletin clarifying their position on the use on Nominees to obtain Federal Employer Identification Numbers (FEINs):
A “Nominee” service is a service that provides the names and addresses of individuals to be named as Members or Managers of an LLC or Officers and Directors of a Corporation. The names provided are then listed on the initial formation documents and the nominees turn the company over to the actual owners after the formation is completed. This process has always been a legal grey area, which is why MyNewCompany has never offered Nominee services.
The IRS Bulletin clarifies that the use of Nominees to obtain FEINs is not permitted by the IRS. Any companies that used a Nominee name to obtain an FEIN in the past are required to update the IRS with the information of a true controlling party of the company (Member or Manager if an LLC or Officer, Director or Shareholder if a Corporation).
Companies formed by non-US Citizens often used Nominee services to obtain an FEIN. The proper procedure is for the non-Citizen principal of the company to obtain an Individual Taxpayer Identification Number (ITIN) or an FEIN from the IRS before beginning the company formation process. Information on ITINs is available HERE.