Question About EIN Number

Hmm, not sure why the driver would need an EIN. That is an "Employer Identification Number" from the IRS. Usually needed to identify a business entity that hires employees and to set up withholding accounts for payroll taxes. Also used for estate purposes when an executor of an estate files estate reports and final taxes for the deceased.

Maybe they are thinking of an I-9 which is used for identification. Used to prove citizenship of employees. I guess that could be used for independents too.

Normally an SS # and a form for 1099 designation would be enough.

 

I would guess that by paying to an EIN, they are less likely to have the whole "employee v. contractor" issue arise because the entity they are paying is an "employer" (implying the entity they are contracting with will hire its own employees and therefore be responsible for withholding and paying the employment taxes), instead of an "individual" (where the company might be found liable for those taxes that should have been withheld and weren't).

 

FYI, I just went in to the IRS office here in Albuquerque (IRS now requires an appointment for office visits, and it might be a couple of weeks lead time requirement) and filed my 2290 tax return, you need an EIN for that purpose. Maybe you can use taxpayers ID, but I think they want the EIN for that filing. It's easy, and it's free. Just do it, it's a pretty handy document as time and events occur.

 

They'll do that so they can write your pay off as a receipt rather than fIle it as payment for a 1099 contractor. For instance, you'd be considered as a power unit for that company even if contracted under 1099. If you run under your own EIN you have to bill them or have an agreement of payment and receive it as payment for services that you have to claim under your own ein as a business.

It's a way for the company requiring this to write it off a business expense rather than payment for contracted services through 1099.

 

Icfd15, I don't believe it's a company requirement. The Federal Government requires all commercial vehicles of various sizes and shapes to pay this tax. Companies can either reimburse or not, but it's a requirement for all commercial vehicles. If the company pays or reimburses, they use the deduction, of course, it's their money. I never thought to ask if my carrier would reimburse, but I've done it 4x and it hasn't come up yet. So I don't think so. I pay the fee, then just file it as a business expense in April.

 

EIN is a tax related, Employee Identification Number usually your SSN, which is not really supposed to be such but they use SSN for everything.

Part of the EIN is to set up a situation to check you against a database to be sure you are a Citizen. That really does not have any point here because it takes a lot just to get a CDL.

Be very careful what you are getting into. As a company driver I could care less what they used for a EIN, all I wanted was the W4's or was that W2's come tax time in Janurary. If they wanted EIN from me for anything else it's going to involve 1099 somewhere. Either out of my pocket or out of the company that hired my one or three trucks or whatever.

 

Well, everyone her took this off the rails, as you noted your question isn't trucking related ... but can apply obliquely. It has to do with the gray world of contracting in general.

In the industry your friend is in, she can thank the contractors at Cisco who sued for employee status and won, for this inconvenience.

The company your friend is contracting with is protecting themselves for lawsuits. By getting an EIN, they can clearly make the distinction that they are contracted with a business for a long term contract. The other alternative is as a temporary contractor. In which case there would be an automatic termination of contract after short period of time. She would not be eligible for re contract, with that company, until an equal period of time has passed.

 

MysticHZ is correct. They're just protecting themselves. Getting an EIN is free and easy by the way. When I was getting mine, I saw that a bunch of companies charged for it but the process was very simple on the IRS website. Took less than 5 minutes I think.

https://www.irs.gov/businesses/smal...-an-employer-identification-number-ein-online

 

Yeah, that sounds about right. My initial EIN was pretty simple. When I moved over to an LLC with an S Corp tax structure, I had to get a new EIN. Still was very simple.