An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to business entities operating in the United States. It is used to identify these entities for tax purposes. For example, a corporation, partnership, or limited liability company uses its EIN when filing its federal tax returns or when opening a bank account.
This identifier is crucial for businesses because it enables them to comply with federal tax regulations, hire employees, and establish financial accounts. Historically, the use of such identifiers has allowed the IRS to efficiently track and manage business tax obligations, ensuring proper revenue collection and facilitating economic analysis. Without a valid EIN, a business may face difficulties in conducting various operational activities and could be subject to penalties from the IRS.