Correcting An EIN (SS-4) Application
So here you are doing a newly formed company or partnership’s tax return for the first year. Maybe you are about to file it. Maybe you are just trying to put in an extension to buy you a little more time. In either case, you press submit, wait a few minutes and then your long awaited IRS acknowledgement comes back. But something’s not right. Rejected? How can this be? Well, one of these reject codes is more than likely the reason:
R0000-922 – Error: Filer’s EIN and Name Control in the Return Header must match data in the e-File database, unless “Name Change” or “Name or Address Change” check box is checked, if applicable.
R0000-900 – The return type indicated in the return header must match the return type established with the IRS for the EIN.
R0000-901 – Filer’s EIN and Name Control (see this related blog post) in the Return Header must match data in the e-File database.
So what do all of the above codes mean? Well, in layman’s terms it means that 1) the entity structure and the EIN on file don’t match what the IRS have one file and 2) that the Form SS-4 that was filled out may have been incorrect based on the preparers intentions.
Verifying what is on file with the IRS.
The first thing you may want to do is see what the IRS has on file for you. Ask the IRS to search for your EIN by calling the Business & Specialty Tax Line at (800) 829-4933. The hours of operation are 7:00 a.m. – 7:00 p.m. local time, Monday through Friday. An assistor will ask you for identifying information about the entity (e.g. name, EIN, address, etc.) and can tell you what entity they have you classified as. The can also provide you with instructions on how to correct it.
Just remember that the IRS will only speak to an “authorized person” with regards to the account. Examples of an authorized person include, but are not limited to, a sole proprietor, a partner in a partnership, a corporate officer, a trustee of a trust, or an executor of an estate.
Changing the Information associated with the EIN.
The IRS doesn’t currently have a form in place to change the previously filed information associated with the business or entity’s EIN. To change what the IRS has on file, one should submit a letter (on company letterhead if possible) to the appropriate IRS office with the following information:
- The responsible party’s full legal name;
- The responsible party’s Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN);
- The business or entity’s full legal name;
- The business or entity’s employer identification number (EIN);
- The business or entity’s mailing address; and
- The information associated with the EIN number that needs to be changed.
Where to mail your change request.
Where you send your request depends on where you live. At the time of this post, these were the applicable addresses:
Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia or Wisconsin
Send your letter to:
Internal Revenue Service
Stop 343G
Cincinnati, OH 45999
Alabama, Alaska, Arkansas, Arizona, California, Colorado, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wyoming, or any place outside of the United States
Send your letter to:
Internal Revenue Service
M/S 6273
Ogden, UT 84201
The IRS will send a letter confirming receipt of the updated information. If the entity has not received a confirmation letter within 60 days, it should mail a copy of the original letter (annotated “Second Request”) to the same campus that they sent the first one.
What one should NOT do is fill out another Form SS-4 for the same company. The IRS will not cancel the first EIN, but will simply issue another one, which can/will further complicate matters.
Need help getting your EIN corrected? Not sure you’re cut out for doing your corporate tax return on your own? Give us a call or send us an email via the information in the footer of this page and we’d be happy to assist you!
Name Changes and Income Taxes
Did you know that the IRS checks whether a Name/Taxpayer Identification Number (TIN) combination is correct by matching it against a file containing all social security numbers (SSN) issued by Social Security Administration (SSA)? Specifically, the IRS is looking to match the Name Control. What exactly is the Name Control?
A Name Control consists of up to four characters for individuals, corporations or trusts. It generally consists of the first four characters of the surname (for individuals), disregards blanks between letters and omits punctuation marks, titles and suffixes.
When you file your individual income tax return keep in mind that:
- All the names on your return must match those on file with the Social Security Administrations records.
- A name mismatch can delay the acceptance of your return by the IRS as well as your refund.
As such, if you experience a name change, make sure you:
Inform the SSA and Get a New Card. Did you get married and are now using your new spouse’s last name or hyphenated your last name? Did you divorce and go back to using your former last name? In either case, you should notify the SSA of your name change. That way, your new name on your IRS records will match up with your SSA records.
Informing the SSA of a name change is easy; you’ll just need to file a Form SS-5, Application for a Social Security Card at your local SSA office and provide a recently issued document as proof of your legal name change. Form SS-5 is available via the link above or by calling 800-772-1213. Your new card will have the same number as your previous card, but will show your “new” name.
Notify the SSA of Dependent Name Changes. Notify the SSA if your dependent had a name change. For example, this could apply if you adopted a child and the child’s last name changed. If you adopted a child who does not have a SSN, you may use an Adoption Taxpayer Identification Number (ATIN) on your tax return. An ATIN is a temporary number. You can apply for an ATIN by filing Form W7-A.
Report Changes To the Health Insurance Marketplace. If you purchase health insurance coverage through the Health Insurance Marketplace, be sure to report changes to your Marketplace throughout the year. These include changes in circumstances, name changes, a new address or a change in your income or family size
2015 IRS Dirty Dozen
As the tax season gets under way, the IRS does us all a public service by posting a list of the top tax scams currently making the rounds. Typically this is done by posting one scam per day over a two to three week period; usually right as the filing season opens up. The IRS recently finished releasing their list, which can be found here.
As we often see some of these scams impacting clients that visit our office, we figured we would post a quick summary. So without further adieu here is the…
Recap of the 2015 IRS “Dirty Dozen” scams:
- Phone Scams: Aggressive and threatening phone calls by criminals impersonating IRS agents remains a threat to taxpayers. Callers often state that they are IRS agents and mention police arrest, deportation, license revocation and other things if the taxpayer doesn’t immediately pay their bill (i.e. as in on the phone right now as we speak). Remember, the IRS typically contacts taxpayers via letter (not phone) and don’t show up unannounced. If someone is asking for payment over the phone, tell them to give you a phone number, that you are calling your lawyer or simply hang up!
- Identity Theft: Taxpayers need to watch out for identity theft especially around tax time. If you believe that a fraudulent return has been filed by someone using your Social Security Number, we urge you to follow the steps we outlined in this identity theft blog post.
- Return Preparer Fraud: Taxpayers need to be on the lookout for unscrupulous return preparers. Most tax professionals provide honest high-quality service. But there are some dishonest preparers who’s actions hurt you and the entire profession. Check out this post for the questions you want to ask any tax professional that you are thinking of using.
- Inflated Refund Claims: Taxpayers should be wary of anyone who asks them to sign a blank return, promise a big refund before looking at their records, or charge fees based on a percentage of the refund.
- Falsifying Income to Claim Credits: Taxpayers should avoid inventing income to erroneously claim tax credits (e.g. the Earned Income Credit or EIC).
- Claims for Fuel Tax Credits: The fuel tax credit is generally limited to off-highway business use, including use in farming. Consequently, the credit is not available to most taxpayers.
- Hiding Income with Fake Documents: The mere suggestion of falsifying documents to reduce tax bills or inflate tax refunds should be a huge red flag when using a paid tax return preparer.
- Phishing: Fake emails or websites looking to steal personal information continue to be a problem. The IRS will not send you an email about a bill or refund out of the blue.
- Fake Charities: Taxpayers should be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. Follow the 10 steps in this post to ensure that you are giving to a “real” organization and not someone trying to steal your money.
- Offshore Tax Avoidance: Anyone suggesting that you can avoid paying tax by hiding it in an “offshore” account is selling you lies. Just research FACTA and you’ll see what the IRS has to say about the topic.
- Abusive Tax Shelters: The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true.
- Frivolous Tax Arguments: Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. Just know that the penalty for filing a frivolous tax return is $5,000.
Anatomy of Bus Bench Ads
First Generation Bus Bench Ad; Soon To Be Retired…
When you’re in business, effectively engaging your prospects and potential customers is half the battle of generating revenue. However, when you communicate via different advertising media (e.g. TV, radio, internet, outdoor, etc), you have to make sure that the design has been properly tailored. If the ad design doesn’t match the media, you risk the possibility of losing a lot of money. Case in point; our bus bench ads.
In 2014 we began using bus bench ads to extend our marketing reach around our retail office. While the bench didn’t “break even” from the standpoint of how much we spent on it versus the revenue generated, it did bring us some customers. With that said, we went back to the drawing board when it came time to redesign it for our contract renewal. Why? Well, we felt that the original version may have been a little too “busy” and cluttered. Thus, we tried to streamline it so that it delivered our message in line with the media (i.e. quick view, limited space and only a few seconds to capture your “on-the-go” audience).
Revised, Revamped and Ready To Reap Revenue!
Designing for outdoor media is a challenging communication task. It requires that one transmit their concept with both clarity and focus. With that being said, here are the top ten points to keep in mind when developing effective outdoor advertising:
The Five W’s. You want to convey the what, where, why, when and who in the most expedient manner possible. Some of you may say that the w’s aren’t in the order that you remember them in from school. Well, when it comes to advertising, the prospect wants to know what’s in it for me before they even care who is offering it. Thus, tell them what you’re offering, where they can get it, why they need it, when they can buy it and who you are in that order. They can always find out who you are, but that isn’t going to initially spark them to continue reading your ad.
Keep your message short. Refine your message to its most basic elements; you may only have 30 seconds of their time if you are lucky. You’re NOT trying to sell them on the spot so don’t waste your time or money attempting to do so. Remember, you just want the person to desire to learn more about the goods and services of the company so they will follow your call to action.
Use a “call to action.” The main reason businesses fail to make the sale is because they never ask for it! If you want the person to do something, explicitly tell them what steps they should take. Things such as call now, visit this website or visit us at 123 Anywhere Street are what we’re referring to. If your space is limited, at a bare minimum the ad copy should be designed so readers have the essential information and are stimulated to respond.
Use bold, vibrant colors. Colors that complement and contrast each other work best. Using more than two or three different colors isn’t advisable. Designs have better readability with opposite colors used next to each other for higher contrast. With colors that are too similar, design elements can blend together at a distance and get lost.
Eliminate unnecessary information. You’re probably not advertising services from Chicago to prospects in Florida. Thus, eliminate items such as area codes and city names if they aren’t absolutely needed.
KISS. Keep it simple sweetheart! Limit the complexity and number of concepts communicated. The more that prospect has to digest, the harder it will be for them to remember just what it is you do.
Use photos and graphics. There is a reason that Jared’s picture is on the benches. Pictures help to create intrigue, convey mental images as well as help an ad stand out. For example, if you see the bench with Jared’s face on it, you might just look at it simply to satisfy your curiosity as to who that guy is? Ads with images are viewed far greater than those with only text, so make sure to use those pictures!
Use large, clear fonts. You want to ensure that you copy is readable; especially for the most important concepts of the ad. In our first generation benches the company name was the most prominent. In the second generation we changed this so that our services were primary. Why? See the five w’s above.
Use intrigue. Make your prospects want to learn and know more about you and what you have to offer. Thus, be intriguing in both words and imagery.
Keep the layout simple. Remember, you’re trying to say a lot in a little amount of time. Make sure that the layout is clean with a clear-cut message and focus. Remember less is always better.
Marijuana, The IRS and Taxes
It’s almost impossible not to notice the wave of marijuana legalization spreading across the country. Even Congress is getting into the act. Research hemp crops were recently included in the 2014 Farm Bill. Furthermore, Congress defunded DEA raids on state-legal marijuana facilities in the 2015 stop-gap funding bill.
Regardless of one’s personal feelings on this topic, it’s obvious that voters, legislators, and Congress are, for the most part, on board for the ride. In some states, this is driven by the expected tax revenue. The IRS, however, still has a few things to say when it comes to marijuana.
First of all, for those folks out there that are already medical marijuana patients or have considered getting their “card,” you should know that the costs of obtaining medical marijuana are NOT deductible as a medical expense on Schedule A of your personal income tax return. The reason for this is that marijuana is still classified as a Schedule I drug by the United States Controlled Substances Act.
If you have deducted your medical marijuana expenses in the past, and you ever get audited, do note that this deduction will be disallowed, and you’ll be subject to paying taxes, penalties, and interest as a result. In order to claim a deduction for this in the future, Congress will need to reclassify cannabis as, at the least, a Schedule II drug. If this is an important personal issue to you, your best course of action right now is to lobby your representative and senator, rather than testing this in tax court (it’s already been tested, and the IRS won).
On the business side of things, it gets even more complicated. Under Internal Revenue Code Section 280E, dealers of Schedule I controlled substances are not permitted to deduct the ordinary business expenses involved in selling their products. This means that recreational and medical marijuana dispensary owners cannot deduct the most common business expenses incurred in running a business, such as rent, utilities, wages, marketing, security, etc. To get an idea of how the tax court is thinking about this subject, feel free to take a look at the Olive v. Commissioner case and the ruling of Judge Diane L. Kroupa.
Marijuana businesses are still allowed to take a Cost of Goods Sold (COGS) deduction from gross revenue. COGS includes the hard cost of acquiring marijuana for resale, for example.
Businesses that provide other services beyond just selling marijuana are allowed to deduct reasonable business expenses for those other services and products. For example, many medical marijuana stores also offer various naturopathic services, yoga classes, massage, etc. Expenses related to those services are deductible (reference: 128 TC 173 (2007)).
Whether you’re a medical marijuana patient or contemplating opening a marijuana related business, it’s important to seek proper legal, tax, and accounting counsel to make sure you stay on the right side of the law.
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