Are you a seller located outside of the United States that sells or plans to sell to U.S. customers? If so, you probably have many questions about the U.S. tax requirements that apply to international businesses. And if you are particularly concerned about how our sales tax laws apply to international (non-U.S.) businesses, then you’ve come to the right place! Helping international businesses understand U.S. sales tax is exactly what we try to do here at the “U.S. Sales Tax for Foreign Sellers” blog.
You see, I know that international businesses, especially international sellers, have many questions about doing business in the U.S. And so the topics that I write about are often based on issues that I am advising my own international clients on or on questions that I receive from international sellers (such as from sellers who post comments at my posts here at SalesTaxSupport).
For instance, I often receive many questions from international Amazon FBA sellers. Because I wanted to address those many questions I wrote a blog post about U.S. Sales Tax for Amazon FBA International Sellers. In that post, I explained that using Amazon’s Fulfillment by Amazon (FBA) service creates a physical presence or “nexus” to those states where an FBA seller’s inventory is located and fulfilled from and as result, creates a legal requirement to charge and collect sales tax on sales to customers in the “nexus” states.
Then because many international sellers wanted to know how to “register” with the states so that they could operate in accordance with the U.S. sales tax laws, I wrote a blog post on 3 key issues that International Sellers should know about the U.S. sales tax registration process.
So, in today’s blog post I am once again writing about a topic that I receive many, many questions about. Actually, I receive questions on this topic almost daily! The question I'll be addressing in this blog post is whether an international seller must obtain a Federal Employer Identification Number (also called an EIN or FEIN) from the U.S. Internal Revenue Service (IRS). And while today’s topic is not about U.S. sales tax specifically, it is very important topic that international sellers need to be aware of if they sell goods to U.S. customers and find that they are required to register to collect sales tax.
What is a Federal Employer Identification Number and Does an International Seller Need One?
In my last post on 3 key issues I explained that an international seller is not required to form or incorporate in the U.S. in order to register with the various states. An international seller may sell through their foreign registered entity – and the foreign entity can apply for a sales tax permit or business license with the various states. Remember – an international seller that has “nexus” to a state (such as an international seller that uses Amazon’s FBA service) is required to register to collect sales tax. However, in order to register, almost every state requires the registering entity to have a Federal Employer Identification Number (EIN). Note that though it is called a federal “employer” identification number, there is no requirement that the applying entity be an actual employer.
An EIN is nine-digit taxpayer identification number assigned to entities such corporations, partnerships and limited liability companies, and may also be assigned to sole proprietors, estates, trusts, and other entities for tax filing and reporting purposes. State agencies use the EIN to identify the registering entity while they process an entity’s application for a state sales tax permit or business license – since the state has yet to assign its own state taxpayer number (and yes, an entity will have different number assigned to it by each state it registers with). So to answer the question about whether an international seller must obtain an EIN – if an international seller wishes to apply for a sales tax permit or business license, the seller must have an EIN.
How to Apply for an EIN
An international seller can apply for an EIN by completing Federal Form SS-4, Application for Employer Identification Number. While it is not possible to provide an in-depth explanation of exactly how to complete Form SS-4, careful consideration should be given to the questions that are asked and information that is requested on the Form because international sellers may need to respond to the various questions on Form SS-4 in a certain way. Therefore, if may be wise to seek the assistance of a U.S. tax advisor experienced in working with international clients or to contact the IRS international taxpayer assistance line at +1-267 941-1099. An international business that does not have a principal place of business or principal office in the U.S. can apply by mailing or faxing the completed SS-4 to the mailing address or the fax number listed on page 2 of the instructions to Form SS-4 (they cannot use the online SS-4 registration process). However, if an EIN must be obtained immediately, an international taxpayer (or a third party designee such as their tax advisor) can also obtain a same-day EIN by completing Form SS-4 and contacting the international taxpayer assistance line.
Concluding Thoughts and Other Important Points to Keep in Mind
International sellers that are considering selling goods to U.S. customers (or that may already be selling to U.S. customers) should keep in mind that they are subject to the U.S. sales tax laws which may require them to register to collect sales tax in states where they have nexus. However in order to register with the various states, a business must obtain an EIN from the U.S. Internal Revenue Service.
In this post I’ve touched on the requirement to obtain an EIN and the proper form to use to apply. However, there is so much more that international sellers should know - such as whether an international seller may be subject to federal taxes (yes, they could be) or be required to file additional returns or forms (yes, there could be a requirement to submit additional IRS filings), or whether an international seller may be subject to other types of states taxes, such as state income, franchise, or gross receipts taxes (yes, other types of state taxes may apply).
So please note, that it is important to realize that there are many more considerations than just sales tax – which is why I’ll cover more of these topics in future posts. In the meantime, if you have questions or would like to recommend a topic for a future blog post, please feel free to leave a comment below.
Other recent “U.S. Sales Tax for Foreign Sellers” posts by Sylvia F. Dion, CPA:
- Wayfair & Economic Nexus for Foreign Sellers: Key Sales Tax Questions
- U.S. Sales Taxes: Filing Frequency for International Sellers
- 7 Key Points Foreign Sellers Should Know about U.S. State Taxes
- Do International Sellers Registering for Sales Tax Need a U.S. EIN?
- International Sellers and U.S. Sales Tax Registration: 3 Key Issues