Fraud

• Fraud is very common threat for both social security and employee identification numbers. Criminals can use these numbers to shield illegal immigrants or individuals who otherwise would not be able to become employed or obtain a loan based on their financial or criminal history. These demands have created a black market for stolen EIN numbers. When one is stolen, it can embroil the original number holder in legal problems.
  
  

Taxes

• Obtaining an EIN number subjects your firm to additional tax scrutiny. For example, some tiny companies that act in the community do not require EIN numbers. Specifically, those that have less than $5,000 in annual sales do not need to file taxes. If your firm is on this scale, then filing for an EIN may give rise to additional scrutiny that could result in the firm owing taxes.
  
  

Necessity

• EIN is simply not necessary for may firms or individuals. For example, many sole proprietors who act as contractors can file personal taxes using the 1040 contract form. They do not need to file a business tax form if they do not have employees. Applying for the EIN is not necessary for these businesses and increases the risks mentioned above.
  
  

Duplication

• Duplication is another danger of applying for an EIN. Once you have an EIN, you may file taxes as a corporation. However, you may also be expected to claim the same revenue as personal income. In this case, you would be paying taxes twice on the same money.