Employer Identification Number Scams: What To Know

Employer Identification Number Scams What To Know

Small business owners and taxpayers are being targeted by scammers charging up to hundreds of dollars for government services that are completely free, with the Federal Trade Commission issuing warnings about fraudulent Employer Identification Number (EIN) websites.

Quick Takes

  • Scammers are charging up to $300 for Employer Identification Numbers (EINs) that the IRS provides absolutely free.
  • Fraudulent websites use official-looking government seals and logos to deceive consumers.
  • The legitimate EIN application process takes less than 15 minutes through the official IRS website.
  • Similar scams target other free government services like TSA PreCheck and Global Entry.
  • The FTC has issued warning letters to businesses selling EINs for potential violations of the FTC Act.

Costly Scams Targeting Business Owners

The Federal Trade Commission recently warned about a scam targeting American taxpayers and business owners – fraudulent websites charging exorbitant fees for government services that are entirely free. These scammers are specifically targeting people seeking Employer Identification Numbers (EINs), charging as much as $300 for something the Internal Revenue Service provides at no cost. Typically needed by businesses, estates, nonprofits, and households with employees, these tax identification numbers are essential for many Americans trying to comply with tax requirements and business regulations.

The deception is particularly effective because these fraudulent websites are designed to appear legitimate. They incorporate IRS-like seals, official-looking logos, and even use domain names that seem governmental. Many victims don’t realize they’re being charged for a free service until after they’ve already provided payment information. What makes these scams particularly concerning is how they deliberately fail to disclose that they have no actual affiliation with the IRS and that their “service fees” are completely unnecessary.

How the EIN Process Should Actually Work

Obtaining an EIN legitimately is remarkably simple and efficient. The IRS provides a free online tool called the EIN Assistant that guides applicants through the straightforward process. Business owners only need to provide basic information about their business and some personal details. The entire process typically takes less than 15 minutes to complete, and the EIN is generated immediately upon completion of the application. This stark contrast to the convoluted process and unnecessary fees charged by scammers underscores the importance of using official government channels.

The FTC is taking action against these fraudulent operators. The agency has already sent warning letters to businesses selling EINs, highlighting consumer complaints and potential violations of both the FTC Act and the recently implemented Impersonation Rule. These measures aim to crack down on entities that falsely imply government affiliation or authorization. The legitimate EIN application can only be completed through the official IRS website, which is the sole authorized channel for obtaining this identification number without unnecessary fees or potential security risks.

Protecting Yourself from Government Service Scams

This EIN scam is unfortunately not isolated. Similar fraudulent operations target other government services such as TSA PreCheck, Global Entry, and various other federal programs that are either free or have standardized fees. The growing sophistication of these scams makes them increasingly difficult to identify at first glance. Consumers should be particularly wary of any third-party service that charges fees for government applications, especially when those fees seem excessive or when the websites use official-looking graphics and language designed to create a false impression of government affiliation.

The FTC recommends several protective measures for consumers. Before engaging with any company claiming to facilitate government services, thoroughly research their reputation by searching for reviews, complaints, or scam reports. Always access government services directly through official .gov websites rather than through search engine results, which may include sponsored listings from scammers. If you’ve encountered an imposter posing as the IRS or other government entity, report it immediately to the FTC at ReportFraud.ftc.gov. Vigilance and skepticism regarding unexpected fees for government services can save Americans hundreds of dollars and protect their personal information.

Sources

  1. These Websites Demanding a Fee for Your Employer Identification Number Are a Scam
  2. Don’t pay to get your Employer Identification Number (EIN)

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