Non-residents opening U.S. LLCs: EIN delays explained

Full transcript

0:12 Hi everyone, I'm Max Dilendorf, New York-based attorney. I represent foreign investors and families with inbound US business activity, tax planning, trust formations and real estate investments in the US. If you are a non-US resident, considering forming US LLC and opening US bank account timing has never been more critical. Today I will explain why EIN delays are creating bottlenecks and how investors are navigating them. So open US bank account for your New York, Wyoming or South Dakota LLC. Banks require employer identification number or EIN from the IRS.

1:04 The EIN is your LLC's federal tax aid, it's needed for banking, payment processors and basic tax compliance.

1:16 The EIN is obtained by filing Form SS4 with the IRS, while the IRS suggests that fax applications could take about four business days and mail applications for the five weeks.

1:35 Non-US owners often face much longer delays in today's climate.

1:41 Right now tens of thousands of foreign-owned LLCs are stuck in line waiting for their EIM number.

1:50 If you form Wyoming or Nevada LLC and submit Form SS4 as a non-resident, you should be prepared for significant delays.

2:00 In many cases, it could take up to 3-4 months to get EIN number.

2:09 During this period, most US banks will not open a business account because under their internal policies EIN is necessary part of the account file.

2:21 US banks follow the Bank Secrecy Act and Fincense customer due diligence rules.

2:28 For non-US residents, this means enhanced KYC and email checks.

2:34 Banks will request your LLC formation documents, operating agreement, passport, and importantly the EIN confirmation letter from the IRS.

2:46 The result is a catch-22.

2:48 You can't really use your LLC without a bank account and you can't open a bank account until the IRS processes your EIN.

2:58 If your US LLC is planning to invest in US real estate or operate a business in the United States, you should start the EIN application process as soon as possible.

3:12 several months of lead time to make sure IRS and bank timelines don't block your transactions. A foreign investor may also work with a regulated U.S. trust company to establish for benefit of a VL account. In this structure the trust company first on boards you as a client and completes the required KYC and and a male due diligence.

3:40 Because the trust company maintains the relationship with the bank, this structure can allow the account to be established while you are waiting to receive your EIN after submitting Form SS4.

3:54 This approach does not eliminate your tax obligations.

3:58 You must still file Form SS4 and comply with all applicable IRS reporting requirements for foreign-owned U.S. entities, but it can help to bridge the banking gap while the IRS processes your application. Our law firm assists international clients with forming U.S. LLCs getting EIN numbers and coordinating banking relationships that support U.S. investments and business activities. If you are considering structuring U.S. entity or need assistance navigating these steps. Feel free to reach out to us for a consultation. Thank you so much for watching and I will see you in the next episode.

A transcript of the recording, so it reads as speech rather than as prose. It explains the law in general terms and is not advice on your own situation, which turns on facts this video cannot know.