Social Security Number

• Individuals in the United States most frequently use a Social Security number as a form of tax identification number acceptable to the IRS. Social Security numbers are unique nine-digit identifiers administered by the Social Security Administration. Every U.S. citizen is assigned a Social Security number. This number is the primary identifier the IRS uses to match individual taxpayers to transaction details reported to the IRS. Although names and addresses may change, Social Security numbers do not.
  
  

Individual Taxpayer Identification Number

• Certain individuals liable to pay tax in the United States are not entitled to receive a Social Security Number from the IRS. These individuals include, most commonly, resident and nonresident aliens, their spouses and dependents. The IRS requires that these taxpayers apply for an individual taxpayer identification number. The IRS generally requires that these taxpayers file IRS Form W-7, Application for IRS Individual Taxpayer Identification Number, prior to engaging in any transaction that may create a tax liability or benefit.
  
  

Employer Identification Number

• For most business taxpayers, including all partnerships, traditional corporations and S-Corporations, it is necessary to obtain an employer identification number, commonly referred to as an EIN, from the IRS before engaging within any taxable transactions. Estates and trusts that must file a U.S. income tax return with the IRS must also obtain an EIN. Like a Social Security number, an EIN is a unique nine-digit identifier. Applicants for an EIN may either file Form SS-4 with the IRS or complete an online application available on the IRS website (see Resources).
  
  

Sole Proprietorships

• Businesses organized as sole proprietorships, including single-member limited liability companies, are typically not required to obtain an EIN from the IRS. Instead of an EIN, the business may use the owner's Social Security number as an acceptable tax identifier for the IRS. However, because this raises security and identify theft issues and because application for an EIN is quick and costless, the majority of sole proprietorships elect to obtain an EIN rather than use the owner's Social Security number.