Some online services claim they can obtain an Employer Identification Number (EIN) in just one business day—even for U.S. companies owned by non-residents. This might sound tempting, but it doesn’t apply to U.S.-registered companies such as LLCs.
If you’re considering opening a business in the U.S., it’s essential to understand how the EIN application process really works—and why there’s no legal shortcut to getting an EIN instantly.
How the IRS Actually Issues EINs
The only legitimate ways to obtain an EIN from the IRS are:
– Online: Available only if the responsible party has a U.S. Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). Also, the IRS limits online applications to one EIN per responsible party per day.
– Fax: If the responsible party does not have an SSN or ITIN, Form SS-4 must be sent by fax. The application then enters the IRS processing queue, which can take weeks or even months due to backlogs.
– Mail: This is the slowest method and can take several months, making it the least practical.
– Phone: Only available if “you have NO legal residence, principal place of business, or principal office or agency in the U.S. or U.S. territories.” This method is reserved for foreign entities, not U.S.-registered businesses.
A responsible party is defined as the individual who controls, manages, or directs the entity applying for the EIN and is legally responsible for its tax obligations.
The Incorrect EIN Shortcut
Some services exploit a loophole in the IRS system by applying for an EIN over the phone as if the company were a foreign entity. This method is intended only for businesses formed outside of the U.S. with no legal structure (like an LLC) established within the U.S.
When the IRS agent accepts this application, an EIN beginning with “98” is issued. This prefix is reserved specifically for foreign entities. The EIN is provided over the phone and confirmed by fax, bypassing the standard wait times.
However, if this EIN is used for a U.S. company, it raises immediate red flags with banks, the IRS, and other financial institutions. Businesses that fall into this trap risk audits, account freezes, and compliance issues.
There are several examples online of companies offering “fast EINs,” and many of their EINs start with “98,” which is a clear sign they were improperly obtained.
The Risks of Using an Improperly Issued EIN
If you apply for an EIN through incorrect means, the IRS may send a letter requesting further information about your business, delaying your tax filings and potentially exposing you to penalties.
An actual excerpt from an IRS compliance letter sent to a business that misused a “98” EIN reads:
“EINs beginning with the number 98 may identify foreign entities that maintain domestic trusts in the United States. Methods to accurately identify domestic trusts maintained by foreign entities are being reviewed, as well as general information about the trust and any other domestic trusts you may maintain… Failure to provide this information could result in further action or examination of your plan.”
Source: IRS Compliance Letter 1562Q
This kind of letter can result in audits or penalties. Additionally, it may raise concerns with suppliers, payment processors, or investors, further complicating your operations.
No Shortcuts, No Risks — Only Legal, Secure EIN Processing
If you hire a third-party service provider to apply for an EIN and they do something improperly, you, the business representative, are ultimately responsible for any legal or financial consequences—not the service provider.
At Globalfy, we follow the correct and legal process to obtain EINs. That’s one of the reasons we’ve been in business for over 10 years. For non-residents forming a U.S. company, there is no fast-track method that is both legal and secure. Any service promising otherwise should be a red flag.
Instead of risking compliance and legal headaches, it’s better to wait a couple of weeks and do it right.
The IRS instructions aren’t always crystal clear, which leaves room for misinterpretation. But the safest route is always to follow the process as it was intended.
Just because something worked doesn’t mean it’s correct—or that it won’t cause problems later.
Discover how Globalfy can help you build your U.S. business the right way—with legal, secure, and compliant solutions from day one.
