Federal tax id and state tax id
Category: Business and Money
Asked by: quantum2003-ga
List Price: $2.00
16 Oct 2003 18:59 PDT
Expires: 15 Nov 2003 17:59 PST
Question ID: 267092
Hi, I have a question regarding the federal tax id and state tax id (UBI number) for doing business in the US. People need to obtain federal tax id number in order to open a business banking account and when they do telephone banking, usually the operator (in the bank) would verify the caller's identity by confir the federal tax id number. So in other words, the federal tax id number should not be given out to other people or else they can get access to our bank accounts (telephone banking). But I found that some of our manufacturers/suppliers/wholesalers ask us to give them the federal tax id number instead of the state tax number (UBI number) when we apply to be the dealer so I am wondering it's common for the manufacturers/suppliers/wholesalers to ask for other companies' federal tax id number? Isn't the state tax id number sufficient to prove that the business owner is operating a legtimate business? I am wondering how come some manufacturers/suppliers/wholesalers would ask for the federal tax id and is it legal for them to ask for that? Any help would be much appreciated. Thanks for your time.
Re: Federal tax id and state tax id
Answered By: serenata-ga on 16 Oct 2003 19:29 PDT
Hello quantum2003 ~ Yes, it is very common for a business to request the Tax Payer Identification of other businesses as a matter of course. A couple of bona fide reasons could be: 1.) There are certain circumstances under which a business must declare sources of income to the IRS, such as a total or lump sum payment of $10,000 or more during the course of business [IRS Publication, "Who Must File Form 8300?"] - http://www.irs.gov/formspubs/page/0,,id%3D10807,00.html or 2.) Discounts to dealer/merchants which amount to payments of over $600 per year via a Form 1099. If they are dealing with a business, they will use the business' Taxpayer ID number; if they are dealing with an individual, they will use the individual's Social Security Number. Other businesses may use a different accounting practice and not find they need it, but it is certainly not unusual, and I wouldn't be too concerned that they ask for it. If your fears are not allayed, however, you are perfectly within your rights to ask them why they are requesting that information and why they feel they need it. Search term - IRS site - forms reporting TIN Best regards, Serenata
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