Yesterday two people sent me email messages asking if I had heard about the IRS trying to prevent people from using IRA money to make nontraditional investments through a limited liability company that is owned by the IRA custodian.  I learned that the source of their questions was an article called “If You Have An IRA, You Need To Know This.”  What follows is my response to the questioners:

You are the second person today and the second person ever to ask the question posed in your email.  I have not heard of the IRS prohibiting EINs for SMLLCs.  Here’s what the IRS says on its website:

“Q. Are any entity types excluded from applying for an EIN over the Internet?

A.  No. All customers whose principal business, office or agency, or legal residence (in the case of an individual) is located in the United States or in one of the U.S. Territories can apply for an EIN online. The principal officer, general partner, grantor, owner, trustor etc. must have a valid Taxpayer Identification Number (Social Security Number, Employer Identification Number, or Individual Taxpayer Identification Number) in order to use the online application.”

See Online EIN Frequently Asked Questions.

Sounds like the IRS doesn’t know it can’t issue and EIN to a SMLLC.  I called the EIN phone number at (800) 829-4933 to ask about this issue, but the wait was over 30 minutes.  I suggest you call that number and see what the IRS person says about it.  If you find any evidence that there is a new rule, please let me know.

If anybody has information about an actual denial of an EIN to an IRA LLC or an IRS official statement on this topic, please let me know.

Update:  The following is the contents of an email message I got from a nice CPA who took the time to call the IRS, wait on hold and speak to an actual person about the issue raised above:

After 1 hr and 55 minutes I got through to the IRS. They know of no announcement prohibiting the TIN division from issuing TIN numbers to single member IRA owned LLC”s.  In fact they were ready to start the process on the phone. I believe we can search through our tax service to try to locate any recent announcements regarding this issue.  I believe they are numbered.

Larry Wayne, CPA
Wayne, Gaynor, Umanoff, LLP
6100 Center Drive – Suite 950
Los Angeles, CA 90045
Tel  (310) 846-5770 Ext. 228
Fax (310) 846-5771