It is not uncommon for a business to be asked by another business customer or individual customer for their federal tax identification number. It is natural for us to put up our guard when this request is made by a customer since identity theft is always a common concern. However, as I explain below there really may be no real cause for concern and this is actually a common request in the course of doing business. Having said that, it is still always important to find out the reason for such a request.
What is a Business Tax ID Number?
It is important to know what the nine digit Federal Employer Identification Number or "FEIN" is for those that don't already know. The FEIN is assigned by the IRS to business entities operating in the United States for the purposes of identification & for employer/employee reporting. It would be the equivalent of an individual's social security number. But, the FEIN is not considered sensitive information and is commonly distributed by businesses. It is also difficult to commit financial or identity theft with just a Federal Tax Identification Number and many banks are aware that businesses disclose this information to their customers upon request. Also, keep in mind that the FEIN can be referred to as the Tax Identification Number or "TIN".
Should I Share My Business Tax Identification Number?
Back to the question, should a business be concerned with giving their FEIN to a customer? Probably not, since it is generally public information that can be obtained by many search databases like FEINSearch.com. But, it is still important to understand why the customer wants the FEIN. If the business is offering a service, the recipient business organization may need a FEIN to issue what is called a FORM 1099-MISC when payments to the business are $600 or more. Form 1099-MISC forms are a common requirement when payment is made to an independent contractor for services rendered that are $600 or more. If the business receiving the services is a Corporation than a 1099-MISC form would not be necessary. In addition, if the recipient of the services is an individual using it for personal use, then a FORM 1099-MISC would NOT be necessary. This is why it is important for you to understand your customer's intention in obtaining the FEIN. It would be somewhat strange for them to request your FEIN just to have it.
What is a Business Tax ID Number?
It is important to know what the nine digit Federal Employer Identification Number or "FEIN" is for those that don't already know. The FEIN is assigned by the IRS to business entities operating in the United States for the purposes of identification & for employer/employee reporting. It would be the equivalent of an individual's social security number. But, the FEIN is not considered sensitive information and is commonly distributed by businesses. It is also difficult to commit financial or identity theft with just a Federal Tax Identification Number and many banks are aware that businesses disclose this information to their customers upon request. Also, keep in mind that the FEIN can be referred to as the Tax Identification Number or "TIN".
Should I Share My Business Tax Identification Number?
Back to the question, should a business be concerned with giving their FEIN to a customer? Probably not, since it is generally public information that can be obtained by many search databases like FEINSearch.com. But, it is still important to understand why the customer wants the FEIN. If the business is offering a service, the recipient business organization may need a FEIN to issue what is called a FORM 1099-MISC when payments to the business are $600 or more. Form 1099-MISC forms are a common requirement when payment is made to an independent contractor for services rendered that are $600 or more. If the business receiving the services is a Corporation than a 1099-MISC form would not be necessary. In addition, if the recipient of the services is an individual using it for personal use, then a FORM 1099-MISC would NOT be necessary. This is why it is important for you to understand your customer's intention in obtaining the FEIN. It would be somewhat strange for them to request your FEIN just to have it.
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