TAX UPDATE FOR 2024: New Requirement for Reporting Employer Identification Number (EIN) for Partnerships

by Mary Varano

The IRS recently introduced a new requirement that impacts Syndication Groups with Self-Directed IRA (SDIRA) investors:

Beginning in tax year 2022, if you have a Self-Directed IRA partner in your partnership, the SDIRA partner in your partnership must report their IRA EIN on Form 1065 Schedule K1 Line 20 code AH. 

Per the IRS, if the IRA partner had Unrelated Business Taxable Income (UBTI) in excess of $1,000 in any previous year, the IRA was required to file a Form 990-T, Exempt Organization Business Income Tax Return, reporting the UBTI and paying the applicable tax on that income.

To file the Form 990-T, the IRA partner would have applied for, and received, a unique EIN. The IRS is aware that in some instances, the IRA partner may not know of a reporting requirement until after the Schedule K-1 is received, which would make it difficult for the partnership to include the EIN on the Schedule K-1.

A partnership with an IRA partner that has never obtained an EIN or has not previously filed a Form 990-T is not required to list the IRA partner’s EIN for on Form 1065, Schedule K-1, Line 20, Code AH for tax year 2022. This relief does not relieve the IRA partner of the requirement to timely file Form 990-T and pay any tax due. However, for all tax years after 2022, partnerships with IRA partners are required to include the IRA partner’s EIN on Form 1065, U.S. Return of Partnership Income, Schedule K-1 if the IRA partner is receiving an allocation of UBTI. Read more here.

This is a new requirement intends to ensure SDIRA partners have the information they need to file Form 990-T for Unrelated Business Taxable Income generated by the IRA during the tax year.

To be clear, this is not the same IRA EIN as the custodian IRA EIN.

How do I apply for an EIN?

You can apply for an EIN directly from the IRS for free: Click here to apply for an EIN for free from the IRS.

Please be aware, any online search for an EIN application will bring up a number of sites that require you to pay a fee to apply. That is not necessary.

How to get the IRA Partner EIN from the IRS website

  1. Click here to begin the EIN application process: EIN Individual Request
  2. Press “Begin Application” and then select the radio button “View Additional Types, including tax exempt and governmental organizations.”
  3. Select the “IRA” radio button.
  4. Press Continue until you reach the page asking for your personal information.
  5. Please provide your personal information (First name, Last name, and SSN/ITIN)
  6. Select the Form 990-T radio button next to the question: “Which tax return will you file?”
  7. Select the IRA radio button next to the question: “Is this an IRA or IRA Rollover?”
  8. Select “This IRA belongs to me.”
  9. Once the application process is completed. Please save the confirmation message in pdf format for your records. The EIN letter should be automatically produced in PDF format please save a copy of that EIN letter as well.

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