February 19, 2025 – Washington, D.C. – The Internal Revenue Service (IRS) is facing significant delays in processing Employer Identification Number (EIN) applications, leaving small business owners, entrepreneurs, and tax professionals frustrated and uncertain about their operations. The delays, which began in late 2024, have continued to impact business registration and tax filing processes, causing widespread concern among those looking to launch new businesses or update their business structure.
What Is an EIN and Why Is It Important?
An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique identifier assigned by the IRS to businesses for tax purposes. It’s required for nearly all businesses that have employees, operate as a corporation or partnership, or file certain tax returns. The EIN is essential for opening business bank accounts, applying for licenses, filing taxes, and managing payroll.
Many new business owners rely on the timely issuance of an EIN to complete the formation of their companies, apply for loans, and begin operations. Without this number, it becomes difficult, if not impossible, to proceed with key business activities.
Delays Are Widespread
Business owners and tax professionals have reported delays of up to several weeks in receiving their EINs. Typically, EINs are processed quickly, with many applications being approved within 24 hours when submitted online. However, starting in late 2024, many applicants have experienced extended waiting times.
The IRS has acknowledged the delays, citing staffing shortages, an increase in application volume, and technical challenges in the processing system as contributing factors. A spokesperson for the IRS stated, “We are actively working to address the backlog and improve the processing times. We understand the challenges these delays cause for business owners, and we are committed to resolving this issue as soon as possible.”
Impact on Small Businesses
Small business owners are among those feeling the brunt of the delays. New businesses are unable to officially begin operations or hire employees without an EIN. Moreover, tax filings and other essential paperwork are put on hold, making it harder for businesses to meet important deadlines.
“Without an EIN, we can’t open our business bank accounts or start the hiring process,” said Emily Parker, a startup founder in Texas. “This delay is putting a serious strain on our timeline and preventing us from taking advantage of tax benefits and loans we had planned for our early growth.”
For those looking to restructure their businesses or convert their entity types (such as from an LLC to a corporation), the delay in receiving an EIN has halted their progress. Experts warn that any further delays could have long-term ramifications for business planning and tax filings.
IRS Attempts to Address the Issue
In response to the ongoing delays, the IRS has outlined several steps to alleviate the backlog, including adding more resources to handle the surge in EIN applications and improving the efficiency of its online systems. However, the agency has provided no specific timeline for when processing times will return to normal.
Additionally, the IRS has been encouraging applicants to use its online EIN application system, which generally processes applications faster than those submitted by mail or phone. For many businesses, the online option remains the best way to expedite their application, though even these requests have been delayed in some cases.
Advisory for Business Owners
In light of the delays, tax professionals are advising business owners to submit their EIN applications as early as possible to avoid disruptions. They also recommend businesses explore other available solutions, such as applying for state-level tax identification numbers or seeking temporary solutions with their financial institutions, where possible.
If you’ve already submitted an application and are waiting for an EIN, the IRS suggests checking the status of your request online. However, business owners should be aware that phone lines and online support services are currently overwhelmed, and delays in communication are common.
Looking Ahead: A Potential Long-Term Issue
Though the IRS has pledged to resolve the backlog, the ongoing delays raise questions about the agency’s capacity to handle the growing volume of business-related tax filings and registrations. Many are concerned that if the issue persists, it could impact tax compliance across the board, especially as businesses prepare for tax season and work to meet upcoming deadlines.
“We’ve been hearing a lot about this issue from clients, and it’s clear that the delays are causing serious disruptions for small businesses,” said Jennifer Hill, a tax consultant. “While we understand the challenges the IRS is facing, it’s critical that they resolve this issue quickly, especially with tax season around the corner.”
As small businesses continue to navigate these challenges, many are hoping for swift action from the IRS. For now, the delay in obtaining an EIN remains an ongoing hurdle that many business owners will need to overcome to get their operations up and running.
Conclusion
The delays in issuing EINs by the IRS are causing frustration and uncertainty for entrepreneurs and small business owners. While the IRS is working to resolve the backlog, the issue continues to affect businesses’ ability to operate, file taxes, and plan for their future growth. Business owners are encouraged to remain patient and proactive in addressing the delays, while staying informed of any updates from the IRS. As the situation evolves, further measures to streamline the application process may be required to avoid long-term disruptions.
