EIN Application: the 55,000 Pound Highway Vehicle Question

After legally forming a new business, the next thing you need to do is get an employer identification number (EIN). Think of this as the SSN for your business – it will be used to open bank accounts, on tax forms, and generally be the way the government keeps track of it. The good news is that getting a EIN only takes a few minutes and is completely free.

Let me repeat: getting an EIN is free. Under absolutely no circumstances should you ever pay someone to help assign you an EIN. A few companies with questionable morals have convinced people that it’s a complicated process that requires their special expertise to apply. They even have the top Google results for someone searching “get an EIN”, which leads many unsuspecting new business owners to think that they’re the only way to get one. (/rant)

The steps to get your number are below. Most of them are pretty straightforward, and none justify paying someone $250.

1. Go to the following IRS website: How to Apply for an EIN | Internal Revenue Service (irs.gov).

2. Click Apply Online, then Begin Application.

3. Pick the legal structure for the business you just formed (LLC, partnership, etc.).

4. Select how many members (owners) and the state you’re in.

5. It will ask you to confirm (if you’re an LLC they’ll let you know you’re going to be a disregarded entity, but that you have an option to be taxed as an S-Corp if you choose to).

6. Select why you’re applying for an EIN (will usually be because you’re starting a new business).

7. Fill out Responsible Party (that’s you). Select “I am one of the owners”.

8. Fill out business address.

9. Legal name of business and its start date (this is the same as what you filled out with the State).

10. Answer the following questions:

~Does your business own a highway motor vehicle with a taxable gross weight of 55,000 pounds or more? (Probably not, but if you’re starting a construction company I suppose it’s possible).

~Does your business involve gambling/wagering? (Unless you’re starting a casino, select No).

~Does your business need to file Form 720? (This is for excise taxes- its unlikely this applies to you, but if you do things like import goods or special manufacturing then select Yes).

~Does your business sell or manufacture alcohol, tobacco, or firearms? (self explanatory).

~Do you have, or do you expect to have, any employees who will receive Forms W-2 in the next 12 months? (Select yes if you have plans to hire someone in your first year. If you’re a sole proprietor, a partnership or a single-member LLC you won’t be getting a W-2 so you can say No).

11. Select the industry that most closely aligns with your business, then the category on the next screen. If you don’t see one that matches exactly you can select Other and type it in.

12. Choose to receive confirmation Online.

That’s it! Make sure you save the PDF of the letter showing your EIN (you’ll also eventually get a copy in the mail, but as you’ll need the EIN to do things now, why wait?).

More on that highway motor vehicle question

This is the question on the EIN application that stops people most often, so it is worth a longer answer than the one-liner above.

What it is actually asking. It has nothing to do with your company vehicle in the ordinary sense. It is asking whether you will owe the federal Heavy Highway Vehicle Use Tax, which is reported on Form 2290. Answering yes simply tells the IRS to expect that return from you. It does not create the tax and it does not change anything else about your EIN.

Whether it applies to you. The 55,000 pound threshold refers to taxable gross weight, which is broader than the weight of the vehicle sitting empty. It combines the unloaded weight of the vehicle, the unloaded weight of any trailers customarily used with it, and the weight of the maximum load customarily carried. In practice this catches heavy trucks, tractor-trailers, and buses. It does not catch pickups, vans, box trucks, or the sort of work truck most new businesses buy, which sit well under the threshold even loaded.

So for most people, no. If you are starting a consultancy, a practice, a shop, a restaurant, or a trade business running ordinary work vehicles, answer no. If you are starting a trucking, hauling, excavation, or bus operation, or you are buying a tractor-trailer, answer yes and expect to file Form 2290.

Two things worth knowing if you did answer yes. The tax period for Form 2290 runs from July through June rather than matching the calendar year, so the deadline is not where you would expect it. And a vehicle you expect to drive only a low number of miles in the year is generally exempt from paying the tax, but you are still expected to file a return reporting it. Low mileage removes the tax, not the paperwork.

If you get it wrong. It is not fatal. Answering yes when you did not need to may mean the IRS expects a return you do not owe, which is a nuisance to unwind rather than a penalty. Answering no when you should have said yes does not excuse you from the tax if you actually owe it. If you are genuinely unsure, that is worth ten minutes with a CPA before you file rather than a year of correspondence afterwards.

Buying heavy equipment or vehicles as you start out raises other questions worth planning rather than guessing at, particularly around how and when to deduct them. Our page for contractors and trades covers that side, and if you are still deciding how to structure the business, our page for business owners is the better starting point.