Difference Between Michigan Tax ID And Employee Identification Number

State Tax ID numbers and Federal Employee identification numbers are two different IDS. They both are required by business organizations, which hire employees and are also legally required identification numbers for some types of business organizations like sole proprietorship, partnership, LLC, corporations, Trusts and so on.

The Michigan Tax ID and EIN numbers are unique nine digit numbers that help the Government to identify the business organization. They are also needed for other purposes like filing tax returns and paying income tax, obtaining other licenses and permits, opening bank accounts for business and getting a line of credit and many other important functions of the business.

There are some main differences between the Michigan Tax ID and the EIN.

  • Issuing authority – The Michigan Tax ID number is issued by the state revenue department or any other similar agency, responsible for collecting taxes. This number is applicable only in the state of its issuance. If the business relocates to other state, it has to obtain a separate state Tax ID number. The EIN is issued by the IRS and is applicable throughout the country. The EIN is a permanent number and stays with an organization throughout its lifetime.
  • Purpose – Employee Identification number is a nine digit number assigned by the IRS and helps to identify the company for tax purposes. The EIN of a company does not change unless the company goes for restructuring or changes ownership. On the other hand a state tax ID is used for the purpose of filing state tax returns. Since these numbers are applicable only for the State in which the business is located, the state tax ID number is not asked by any other agencies. If the business has employees in more than one state, it has to file state payroll tax in each state and must obtain a State Tax ID in each of the state.

It is very important to obtain the Michigan Tax ID and Federal EIN numbers whenever required. The numbers are required to file income tax returns electronically and pay the taxes like income tax, payroll tax, sales tax and others. Employees will also be asked to mention the EIN and tax ID at the time of filing returns. The IRS and the state revenue departments match the data to ascertain proper payment of taxes.