IRS advice says an acquiring corporation should obtain a new EIN

Plain-English summary

Chief Counsel advised that an acquiring corporation could not continue using the employer identification number of a disregarded entity acquired from its parent in the described transaction. The advice stated that the acquiring corporation should have obtained a new EIN when it was formed. The disregarded entities could continue using their current EINs if they later needed to file federal employment or excise tax returns under Treas. Reg. § 301.6109-1(h). Chief Counsel did not opine on whether the transaction qualified as a tax-free reorganization or on possible penalties under IRC §§ 6721 through 6724.

Ruling snapshot

• Question: Could the acquiring corporation use an acquired disregarded entity's EIN after the described transaction?
• Outcome: Advice given
• Key authorities: Treas. Reg. § 301.6109-1(h); Rev. Ruls. 73-526, 2001-61, and 2008-18

Full text (IRS public release)

ID: CCA_2013123112051007 [Third Party Communication:

UILC: 6109.04-00 Date of Communication: Month DD, YYYY]

Number: 201409008

Release Date: 2/28/2014

From:

Sent: Tuesday, December 31, 2013 12:05:10 PM

To:

Cc:

Bcc:

Subject: RE: question about identifying numbers

Based on our review of Rev. Ruls. 73-526, 2001-61, and 2008-18, plus the instructions to Form SS-4, it is
our conclusion that this scenario does not fall within the fact patterns in the revenue rulings or instructions
which would allow for the acquiring corporation (----------------------) to continue to use the EIN of one of the
disregarded entities it acquired from the parent, --------------------------. In essence, the parent dropped
assets (-------------------------------------------------) into the acquiring corporation in what it purports to be a tax
free (F) reorganization. Exam is apparently looking into whether the transaction is a tax-free
reorganization, and we provide no opinion on that issue.

That said, this transaction occurred in -------, and you have informed us that the foreign disregarded
entities have no federal employment or excise tax obligations and, thus no reason for needing an EIN, but
should either of the disregarded entities ever need to file a US employment or excise tax return, then
under section 301.6109-1(h), the disregarded entities are required to use their current EINs. Therefore, it
appears that the acquiring corporation should have obtained a new EIN upon its formation in -------. While
it may be possible that certain payee or information statements may have been incorrect because of the
acquiring corporation not having used the proper EIN, we have not been asked to opine on any potential
effect of sections 6721-6724, and accordingly, do not do so.