Can My New Business Keep My Old EIN?

Any time a business is considering any type of restructuring or reorganization the business should not forget the significant, but often overlooked detail of EIN retention.  Often switching EINs can prove to be an administrative headache, especially if that EIN is tied to business licenses, or is tied to reimbursements from Medi-Cal or health insurers.  In these situations, the seemingly easy switch to a new EIN can cause a substantial interruption in business and cash flow.

While the IRS has released guidance on when a business must obtain a new EIN or can retain an existing EIN (see Publication 1635) there are several “gaps” when it comes to corporate conversions to LLCs. 

A conversion is a change in the legal status of a business—not to be confused with a merger that is the joining of two separate legal entities. Ordinarily, the IRS will reassign the EIN of a corporation to a successor LLC if the corporation converted to an LLC under state law; whereas, when a merger occurs the surviving entity’s EIN should typically be used. 

Although not biding authority, the IRS’s own Internal Revenue Manual states that “If an Entity reorganizes/converts at the state level and maintains the same structure (officers, employees, type of business), the entity may retain their EIN.” 

In short, if EIN retention is paramount, it may be that a statutory conversion would be more appropriate for your business than any other reorganization.