A business considering an extensive restructuring of operations should be aware not only of the certificates of merger or conversion that may have to be filed with state authorities, but also of the consequences of the reorganization under subchapter C of the Code, including the entity classification rules of Regs. Secs. 301.7701-1 et seq. If a company wants to retain its employer identification number (EIN) used for filing federal employment tax returns (e.g., Forms 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, and 941, Employer's Quarterly Federal Tax Return), or for filing its income tax return, care must be exercised to understand how the reorganization affects the EIN. If, for example, the company is involved in the provision of health care, and the EIN is used to obtain reimbursement from state Medicare or Medicaid authorities, any interruption in the EIN's validity can create serious economic hardship for the company. The same concern exists if a business license or existing service contract depends on the business's FIN remaining valid.
The IRS has published extensive guidance on when a business must obtain a new EIN and when an existing EIN may be retained following a reorganization (see, e.g., Publication 1635, Employer Identification Number: Understanding Your EIN (2012)), available on the IRS website at irs.gov. Additional IRS guidance is needed, however, to address reorganizations under Sec. 368(a)(1)(F) (F reorganization). Generally, an F reorganization occurs if there is a mere change in identity, form, or place of organization of one corporation, however effected. The use of disregarded entities is now common in F reorganizations, which can create unique issues as to what should happen to the EIN of a company that is a party to the reorganization.
Rev. Rul. 73-526 and the IRM
Rev. Rul. 73-526 addresses various scenarios in which a company undergoing a reorganization either can keep its EIN or must obtain a new one. The previously assigned EIN should be used by the surviving corporation in a statutory merger and in a reincorporation qualifying as an F reorganization. A new EIN should be requested by the new corporation in a consolidation and in any reincorporation transaction not qualifying as an F reorganization.
The Internal Revenue Manual (IRM) also contains guidance on what happens to a company's EIN when that company is reorganized. IRM Section 220.127.116.11.20 states that "if an entity reorganizes/converts...