EIN for a Canadian Corporation: When It Needs One and How

Does a Canadian corporation need a US EIN?

A Canadian corporation does not need a US employer identification number (EIN) just to invoice US clients: its Canadian business number goes on Form W-8BEN-E. It needs an EIN to file Form 1120-F, even a treaty-exempt return, to run US payroll or to give Form W-8ECI; some US banks and states also ask for one. Canadian companies have no EIN until they apply on Form SS-4, and the IRS charges nothing for one (IRS).

The Form 1120-F instructions say a corporation without an EIN must apply for one, and a refund claim is made on that return. Publication 15 requires an EIN to report employment taxes. The Form W-8ECI instructions make a US taxpayer number a condition of a valid form.

Getting an EIN does not by itself make the corporation file a US return; its US activity and income decide that. The EIN is rarely the hard part; the reason for it is. An EIN needed for Form 1120-F means the corporation must also settle whether it has US business activity, its treaty position, Form 8833 and any missed years. Tax a US client already withheld may take a Form 1120-F to recover. US payroll and a state registration add federal and state employer accounts. Those are two-country questions; see whether a Canadian corporation must file a US return.

Gather before applying:

• The articles or certificate of incorporation, for the exact legal name
• The nine-digit business number
• The principal officer's full name and title, and whether that person has an SSN or ITIN
• The corporation's Canadian mailing and street addresses
• The month its accounting year ends
• A short description of the US activity and the date it began
• The number of US employees expected in the next 12 months

What is the Canadian equivalent of an EIN?

The business number (BN), the nine-digit identifier the Canada Revenue Agency gives a business. It is not an EIN, and a US form that asks for an EIN cannot take it.

The BN is the core of the corporation's CRA account numbers, such as its RC corporation income tax account (CRA). Which form of it goes on Form W-8BEN-E is covered in Form W-8BEN-E for a Canadian corporation. An EIN is written 00-0000000 (Publication 15).

When is the business number enough on Form W-8BEN-E?

The BN on line 9b is enough when the corporation documents itself to a US client or claims treaty benefits on Form W-8BEN-E. The IRS instructions require a US taxpayer number on line 8 for a treaty claim when no foreign tax number is on line 9b, and in the cases below. Pay for work done in Canada is not US-source income, so it needs no treaty claim (26 USC 862). For US-source business profits with no US permanent establishment, a corporation claiming the Canada–US treaty's business-profits article on line 15, with 0 as the withholding rate, can rely on its BN. Line 8 is for a US EIN only; do not put the BN there.

The BN is not enough when:

• The corporation must give Form W-8ECI instead, because that form needs a US number.
• The corporation is a partner in a partnership doing US business, such as a US LLC with several owners (a Canadian partner in a US LLC), or the payment is another case listed in Regulation 1.1441-1(e)(4)(vii).
• The corporation must also file Form 1120-F, for example a treaty-exempt return. A treaty claim on the W-8BEN-E does not settle that question.

For the form itself, a client asking for a W-9 or a 1099 that arrived anyway, see Form W-8BEN-E for a Canadian corporation.

How does a Canadian corporation fill in Form SS-4 without an SSN?

The corporation applies in its own name, names an individual officer as responsible party, and writes "foreign" or N/A on line 7b when that officer has no SSN or ITIN and is not eligible for one. The instructions say an entry on line 7b is required. There is no "foreign corporation" box: line 9a is Corporation and line 9b names Canada (Form SS-4).

When the EIN is only for a W-8 form other than W-8ECI, or a treaty claim, the chart on page 2 of Form SS-4 asks only for lines 1–5b, 7a–7b, 8a, 9a, 9b, 10 and 18. The answers on the form set up the corporation's IRS business tax account. Describing the corporation as US-formed, or applying under a director's own name, sets up the wrong record.

Can you get a US EIN remotely from Canada?

Yes. A corporation with no US legal residence, principal place of business, or principal office or agency applies by phone, fax or mail. It cannot use the online application (SS-4 instructions; IRS). One whose principal place of business or principal office is in the US cannot use the phone line: it faxes Form SS-4 to 855-641-6935 or mails it to Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999, and the online tool still needs the responsible party's SSN or ITIN.

Use one route only, so the corporation does not end up with two EINs. The IRS issues one EIN per responsible party per day. If Form 1120-F is due before the EIN arrives, a paper return can show "Applied For" and the application date; an electronically filed return needs the EIN at filing (Form 1120-F instructions). A new EIN works at once on a paper return, but e-filing and electronic payments may not accept it for up to 2 weeks (IRS).

Who is the responsible party, and who can make the call?

For a corporation, the responsible party is usually the principal officer: the individual who controls the corporation and directs its funds and assets. It must be a person, not an entity, so a Canadian parent company cannot be listed; name an individual instead. If several people qualify, list the one the corporation wants the IRS to recognize (IRS). A nominee, such as someone given limited authority only to handle a formation, cannot apply and should not be listed.

The caller must be authorized to receive the EIN and answer questions about the form, such as an officer who signs it, or a third-party designee named in the designee section of Form SS-4. The designee authorization is valid only when the form's signature area is completed. The designee's authority ends once the EIN is assigned, and the EIN notice is mailed to the corporation. If the designee's address or phone number matches the corporation's, the application must go by mail or fax (SS-4 instructions).

What should the corporation check after the EIN arrives?

Check the name the IRS recorded, then use that legal name with the EIN on every US form. IRS systems accept only letters A–Z, numbers, hyphens and ampersands in a business name. Other symbols are spelled out or replaced, and apostrophes are removed (IRS). A missing period after "Inc" or a dropped accent (Société becomes Societe) is formatting. A wrong, missing or extra letter is an error to fix before the first Form 1120-F.

• Still a W-8, never a W-9: an EIN does not make the corporation a US person. It keeps giving US payers Form W-8BEN-E or W-8ECI; a foreign person may not give Form W-9 (W-9 requester instructions).
• Same name everywhere: use the legal name from SS-4 line 1 on Form 1120-F and every other return (SS-4 instructions), and the same corporate name on W-8BEN-E line 1 (W-8BEN-E instructions).
• Later name change: check the name or address change box on the next Form 1120-F.
• New responsible party: report it on Form 8822-B within 60 days. Use the same form for an address change after a return is filed.
• Employees listed on line 13: expect to file federal employment tax returns, Form 941 each quarter unless line 14 was checked for Form 944. An officer or other responsible person who willfully leaves withheld wage tax unpaid can personally owe 100% of it under section 6672 (Publication 15).
• EIN only for a W-8 or a treaty claim: if the IRS later asks for a return the corporation does not owe, reply promptly that it has none to file, or the IRS may assess tax; if a filing duty starts later, use the same EIN (Internal Revenue Manual 21.7.13.3.2.7.1).

If the EIN notice never arrives, the number is lost, the IRS recorded the name wrongly or a bank says the name does not match, see EIN delayed, lost or not matching.

Example

These examples are illustrative; amounts are in US dollars.

A Toronto software corporation billing US clients

The corporation bills US clients US$200,000 a year for work done in Canada and has no US office. Each client gets a W-8BEN-E with the BN on line 9b, and no EIN is needed for that. Later it sends two staff to work at a client's US site. That may mean it must file Form 1120-F; whether the return is treaty-exempt depends on whether it now has a US permanent establishment. Either way the return needs an EIN, so its president calls the international line, gets the EIN during the call and files under that number.

A Vancouver corporation hiring in Washington State

The corporation hires one employee who lives and works in Washington, at US$80,000 a year. Before the first payday it applies on Form SS-4: line 10 Hired employees, line 13 one employee, line 15 the first US payday. It then opens Washington's own employer accounts. An employee working in the US may also mean the corporation is engaged in a US trade or business; if so, it files Form 1120-F each year, even if the treaty exempts its profits.

A Calgary corporation with a misspelled IRS name

A director called the international line, and the EIN notice reads "Prairie Fild Services Inc" for Prairie Field Services Inc. The missing period is IRS formatting; "Fild" is an error. The corporation has the IRS name corrected before its first Form 1120-F, so the name and EIN on that return and on its W-8BEN-E match.

Different for you?

• The EIN is for a first Form 1120-F or a treaty-exempt return: settle the filing and treaty position with Canadian corporation US tax returns and cross-border tax help.
• Earlier US returns may be missing: see missed US returns for a Canadian corporation and get cross-border tax help.
• A US client withheld tax: the client may be able to return tax withheld by mistake; otherwise an IRS refund runs through Form 1120-F. See US tax withheld on payments to Canadians and get cross-border tax help for the refund return.
• A client wants a W-9 or sent a 1099: see Form W-8BEN-E for a Canadian corporation.
• You are hiring in the US or registering in a state: see hiring an employee across the border and registering a Canadian corporation in a US state, then cross-border tax help for the payroll and state accounts.
• A US bank asked for an EIN: see a US bank account for a Canadian corporation.
• You are forming a US subsidiary: it gets its own EIN; see setting up a US subsidiary from Canada and getting an EIN without an SSN.
• The corporation owns a US LLC alone: the LLC gets its own EIN, but unless it elects to be taxed as a corporation, US rules disregard it (26 CFR 301.7701-3). Its US business can then make the Canadian corporation file Form 1120-F under the corporation's own EIN; see a Canadian owner of a US LLC and get cross-border tax help.
• The company is an unlimited liability company: US rules do not treat a Nova Scotia unlimited liability company, or another Canadian company whose owners all have unlimited liability, as an automatic corporation (26 CFR 301.7701-2). That can change the SS-4 entity box and the US return; get cross-border tax help.
• You personally need a US tax number: see an ITIN for a Canadian.