Foreign-owned single member LLC has EIN issues....!

[mike2222]

Hi everybody!
I got some issues with the EIN of my LLC and need your help how to fix it.

The Background story:
I am a non-resident alien (from Europe) who formed a single-member LLC in New mexico in January 2024. Everything went smooth until the point where I hired a service provider for the application process of an EIN for my LLC. I thought that would be a good idea since I do not have any SSN or ITIN (which means getting EIN would have probably taken weeks) and he seems to be an “american expert” with many clients and references. Indeed, He got the EIN for my LLC via his SSN within minutes... But what I didn't know at that time: on the IRS confirmation letter was his name mentioned as "EIN responsible party", not mine. But I am the true responsible party behind the LLC…
I tried to fix it via filing the form 8822-b, added my name as “new responsible party” and mentioned under “9 - new responsible party’s SSN, ITIN or EIN” that I am a “foreigner”. IRS sent me a written reply that they cannot proceed with my case without me providing the ITIN of the new responsible party… but I do NOT have an ITIN. What solution would you guys recommend? If I try to get the ITIN first, it would take me at least 4 to 6 more months until I am gonna be able to change the responsible party (form 8822-b). I am worried about IRS penalties because It clearly says that change of responsible party should be reported within 60 Days…. In my case, with all the application process for the ITIN It's gonna be up to 6 to 9 months after my first correspondence with the IRS until its (hopefully) gets fixed… You don’t think this gonna be risky and the IRS will fine me? Second option I see is getting a new EIN for my LLC on my name but I am not sure how easy its gonna be to replace the old EIN of my LLC with the new EIN…

Bottom line of my case:
After talking to different CPAs I got different approaches recommended and it seems like that even the CPAs don't know how the best solution or at least it looks like there might not be THE "one and only" solution, right? Here the options:

1. One CPA recommended that I should send the 8822-b form again, but this time with even filling the address box (even if there was no change of address). He believes that the IRS employee made a mistake and should've accepted "the change of responsible party" even at the first time.
2. Sending "EIN cancellelation letter" to IRS and telling them that the "structure of the business changeed and the new responsible party is a foreigner without ITIN or SSN and has no US Income" and requesting a new EIN.
3. Getting ITIN first and after that re-filing the form 8822-b with the ITIN. Downside of this solution: Would probably take me 4-6 months based on different sources. Since I don't have any US source income and not gonna be taxed in the USA anyways, ITIN would be more or less useless, right?

What would you do in my situation? Honestly, I am overwhelmed by all the LLC stuff and I am scaly of penalized by the IRS for late reporting (it's been already 6 months since I got the IRS letter that they cannot proceed with ITIN and I haven't replied yet…).

I am sorry if my post got too long.... any help would be hightly appreciated!
Mike

 

[12345]

Hi, just my 2 cents :
ITIN application takes 8-10 weeks now
EIN for non us resident is 2-3 weeks

ITIN can be helpful if you are looking to open a bank account in traditional US bank like bank of america (can't be done remotely)

Maybe just open a new US LLC and abandom this one if possible ? They won't do anything, it would dissolve automatically when you fail to pay the annual fee

 

[CyprusLawyer101]

Assess whether keeping the IRS updated on the steps you are undertaking and your concerns would save you from any penalty. For example try to work through the matter with them, or at least notifying them of the steps you are taking. This way you are setting up your case for not being penalized in full transparency with them.

Anyway how much could that penalty be that scares you so much?

 

[mike2222]

Hey, thanks to both of you for your thoughts and recommendations!

Assess whether keeping the IRS updated on the steps you are undertaking and your concerns would save you from any penalty. For example try to work through the matter with them, or at least notifying them of the steps you are taking. This way you are setting up your case for not being penalized in full transparency with them.

Anyway how much could that penalty be that scares you so much?

Well said. I tried to keep the IRS informed: We filed the 8822-b form as soon as possible and stayed within the 60 days time frame... But we didn't replied to the IRS response (which said that they cannot proceed without me providing ITIN...). And that's been over 5 months now, thats the reason why I am slightly little bit worry about penalties. But yeah, In the end of the day, I don't have any real "references" regarding penalties, Just read many articles and quora posts from random people that IRS might give high penalties very fast... Don't know how true that is.

I think I should follow your suggestions. I shouldn't be too much worry about any penalties and just give the IRS another shot and keep them informed. Will send them the 8822-b form again, this time including a seperate letter where I explain the situation that I don't have any ITIN or SSN etc.
Do you think I should also add SS-4 right away to this letter or just wait and see, if maybe 8822-b and my letter would be enough?

Maybe just open a new US LLC and abandom this one if possible ? They won't do anything, it would dissolve automatically when you fail to pay the annual fee

Well, that's indeed an option I already got recommended by couple of people (including 2 CPAs). But I wanna avoid this because I already did some business with my current LLC this year + I got Mercury account and Amazon accounts for this LLC... So don't wanna have the hustle and bustle of transferring everything or even risking my amazon Accounts. On the other hand, if I get a new EIN I might face the similar issues with reniewing/transferring everything, right? Of course, if getting new LLC and disolving the old one is the easiest option, I have to do it. In that case: I got following questinos:

• Do I still need to file the Form 5472/1120 or any other forms for the disolving LLC? As far as I know regarding the anual report; I don't need this since I have a new mexico LLC....
• regarding your suggestion with not paying the fee so that it gets automatically disolved: I heard its not a good Idea if I plan to start the new LLC in the same state, right? Is it not better just to do it the right way and file the "letter of dissolution" or do I have other obligations in that case?

Right now I think the best solution would be trying to fix the EIN issue of my current LLC first. If it doesn't work, than I should consider disolving my current LLC and getting a new one the right way.


Thanks again to everyone for your help

 

[CyprusLawyer101]

Hey, thanks to both of you for your thoughts and recommendations!


Well said. I tried to keep the IRS informed: We filed the 8822-b form as soon as possible and stayed within the 60 days time frame... But we didn't replied to the IRS response (which said that they cannot proceed without me providing ITIN...). And that's been over 5 months now, thats the reason why I am slightly little bit worry about penalties. But yeah, In the end of the day, I don't have any real "references" regarding penalties, Just read many articles and quora posts from random people that IRS might give high penalties very fast... Don't know how true that is.

I think I should follow your suggestions. I shouldn't be too much worry about any penalties and just give the IRS another shot and keep them informed. Will send them the 8822-b form again, this time including a seperate letter where I explain the situation that I don't have any ITIN or SSN etc.
Do you think I should also add SS-4 right away to this letter or just wait and see, if maybe 8822-b and my letter would be enough?





Well, that's indeed an option I already got recommended by couple of people (including 2 CPAs). But I wanna avoid this because I already did some business with my current LLC this year + I got Mercury account and Amazon accounts for this LLC... So don't wanna have the hustle and bustle of transferring everything or even risking my amazon Accounts. On the other hand, if I get a new EIN I might face the similar issues with reniewing/transferring everything, right? Of course, if getting new LLC and disolving the old one is the easiest option, I have to do it. In that case: I got following questinos:

• Do I still need to file the Form 5472/1120 or any other forms for the disolving LLC? As far as I know regarding the anual report; I don't need this since I have a new mexico LLC....
• regarding your suggestion with not paying the fee so that it gets automatically disolved: I heard its not a good Idea if I plan to start the new LLC in the same state, right? Is it not better just to do it the right way and file the "letter of dissolution" or do I have other obligations in that case?

Right now I think the best solution would be trying to fix the EIN issue of my current LLC first. If it doesn't work, than I should consider disolving my current LLC and getting a new one the right way.


Thanks again to everyone for your help

Well, without knowing the details on those forms, I would say not to file any further forms or information other than ehat is necessary for them to advice you further on the way forward.