Tax Identification Numbers for Businesses and Trusts

by Layne T. Rushforth

Your Tax ID.  Your tax identification number is your social security number if you are a U.S. citizen or a resident alien. It is applied for using IRS Form SS-5. A non-resident alien can also apply for tax identification number using IRS Form W-7.

Tax ID for Entities.  A separate tax identification number (also "employer identification number" or "EIN") is required for business entities and irrevocable trusts that are not considered grantor trusts.  The IRS also refers to this taxpayer identification number as an EIN even when the taxpayer entity is not an employer.  IRS Form SS-4 is used to apply for this number, but it is also available online on the IRS web site.

EIN for Trusts.  An EIN for a trust is applied for using the same IRS Form SS-4 (or online web site) as for business entities.

Grantor Trusts.  Your social security number can be used as the EIN for a trust that is considered a "grantor trust" under federal income tax law.  A grantor trust is recognized as a separate entity under state law but is ignored for purposes of federal income tax law.  Grantor trusts include all revocable trusts and irrevocable trusts for the benefit of the trust's creator (who might be referred to as the grantor, settlor, or trustor).  Some irrevocable trusts — sometimes called "intentionally defective grantor trusts" ("IDGTs") — are intentionally designed to be grantor trusts for federal income-tax purposes even though the settlor is not a trust beneficiary.

EIN for Irrevocable Grantor Trusts.  Even though federal tax law permits you to use your social security number as the EIN for a grantor trust, we recommend applying for an EIN if the trust is irrevocable.   There are a number of reasons for this recommendation:

  • A separate EIN helps keep the financial records for irrevocable trusts separate from your personal financial records.

  • Having a separate EIN reduces the risk of giving the settlor inappropriate access to trust assets.  Banks and other financial institutions often give unlimited online access to all accounts using the same SSN.

    • As to a Nevada asset-protection trust (a.k.a., "self-settled spendthrift trust" or "SSST"), if online access allows the settlor to make transfers unilaterally, the spendthrift trust protection is at risk under Nevada law.

    • As to completed-gift trusts, online access can cause estate-tax inclusion under federal estate-tax law.

Request for EIN.  When you open a financial account, you will be requested to provide a EIN. Sometimes this is done by asking you to complete, sign, and submit an IRS Form W-9.  Be sure to submit the EIN corresponding to the individual or entity that owns the asset.  If you find that a financial institution has an incorrect EIN, provide the institution with an IRS Form W-9 to update their records.

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