Grantor Trust EIN Question - Do I Need to Apply for an EIN During an IRS Audit?

This is actually a common confusion point during audits. You're correct that grantor trusts typically don't need their own EIN when the grantor is alive - they can use the grantor's SSN. However, since your mother-in-law has passed away, the situation gets trickier. When a grantor dies, the trust usually becomes a separate taxable entity, which would require its own EIN. The timing matters though - if the audit is for a tax year when she was still alive, you have a good argument that no separate EIN was required for that period. I would politely explain to the agent that for the tax year under audit, the trust was a grantor trust using the grantor's SSN per IRS regulations. You could reference Revenue Procedure 2010-41 and Treasury Regulation 1.671-4 which cover the taxation of grantor trusts.

I went through something similar with my dad's trust audit last year. The IRS agent kept insisting we needed an EIN even though we didn't. I ended up using taxr.ai (https://taxr.ai) to analyze our trust documents and get clarity on the grantor trust regulations. Their analysis saved us from making a huge mistake! They reviewed our specific trust language and confirmed we were correct about not needing an EIN during the period when my dad was alive. Their report explained exactly which sections of the tax code supported our position, which I sent to the IRS agent. The agent backed off immediately when they saw we had expert backup for our position.

I tried taxr.ai after seeing the recommendation here and it was incredibly helpful with my aunt's trust situation! I was totally confused about whether we needed an EIN after her death, especially since we were also dealing with an audit question. The analysis clarified that during my aunt's lifetime, her grantor trust properly used her SSN, but after her death, we did need to obtain an EIN going forward. They even provided specific references to Treasury Regulation 1.671-4(h) which explains the transition rules after a grantor's death. This saved me from making contradictory statements to the IRS about our trust status. Definitely worth it if you're trying to navigate these complicated trust tax rules!

When I had trouble with the IRS about my family trust last year, I spent WEEKS trying to reach someone at the IRS who could actually understand grantor trust rules. The general agents I spoke with kept giving me conflicting information. After 20+ attempts to reach the right department, I almost gave up. Then I found Claimyr (https://claimyr.com) which got me connected to a senior IRS agent in under 45 minutes! They have this cool system that navigates the IRS phone tree for you - you can see how it works in this video: https://youtu.be/_kiP6q8DX5c The senior agent I finally spoke with confirmed that I didn't need an EIN for the grantor trust for the tax years when my father was alive. She also noted in my file that this had been confirmed so future agents wouldn't request it for those tax years.

I have to admit I was completely wrong about Claimyr. After dismissing it as a probable scam, I was desperate enough to try it for my own trust tax issue. Within 57 minutes, I was actually speaking with an IRS representative who specialized in trust taxation! The agent explained that for grantor trusts during the grantor's lifetime, using the SSN is proper (under Treas. Reg. 1.671-4). But she also clarified that once the grantor passes away, the trust needs its own EIN going forward. She helped me understand that getting an EIN now wouldn't retroactively create filing requirements for prior years when the trust properly used the grantor's SSN. This saved me from fighting the wrong battle with the IRS. Sometimes it's worth admitting when you're wrong - this service actually delivered exactly what it promised.

I just went through this exact issue. Here's what worked for me: request a call with the audit manager (not just the agent). The manager will likely be more familiar with grantor trust rules. Reference IRS Revenue Procedure 2010-41 and Treasury Regulation 1.671-4 specifically. These clearly state that a grantor trust where the grantor is the trustee can use the grantor's SSN instead of an EIN. Bring printed copies if you have an in-person meeting. Also, consider whether the trust terms changed after your mother-in-law's passing. If your father-in-law became the sole grantor after her death (assuming the trust allowed for this), you might still be able to use his SSN rather than getting an EIN.

Has anyone considered that the IRS agent might actually be right in this specific situation? Without seeing the exact trust language, it's hard to say for sure, but not all "family trusts" qualify as grantor trusts under IRC 671-679. If the trust has specific provisions that don't meet the grantor trust rules, it should have had its own EIN from the beginning. The fact that you've been using the SSN doesn't automatically make it correct.

I'm dealing with a similar situation with my grandmother's trust audit, and I found that getting documentation from the original attorney who drafted the trust was incredibly helpful. The attorney was able to provide a letter explaining the specific provisions that made it qualify as a grantor trust under IRC 671-679. If the original attorney isn't available, consider having another estate attorney review the trust document. They can provide a written opinion on whether it properly qualifies as a grantor trust during the audit period. This kind of professional documentation carries a lot of weight with IRS agents and can prevent you from having to argue the technical details yourself. Also, don't forget that you have the right to request a different agent if the current one seems unfamiliar with grantor trust rules. Sometimes a fresh perspective from another agent who specializes in trust matters can resolve the issue quickly.

You're absolutely right to be concerned about this EIN request during the audit. I went through something very similar with my late husband's trust audit two years ago, and the key is understanding the timing distinction. For the 2022 tax year when your mother-in-law was alive, if the trust properly qualified as a grantor trust, it should have been using her SSN - not an EIN. The IRS agent may be confused about the requirements or applying current post-death rules to the historical audit period. I'd recommend preparing a clear timeline showing: (1) During 2022, mother-in-law was alive and the trust was a grantor trust using her SSN, (2) After her death, the trust status changed and may now require an EIN going forward. These are two separate tax periods with different requirements. Consider requesting to speak with the agent's supervisor if they continue to insist on an EIN for the 2022 audit period. In my experience, supervisors tend to be more familiar with the nuanced grantor trust regulations. Also, document everything in writing - send a follow-up email after any phone conversations summarizing what was discussed and your position. The most important thing is not to let them pressure you into getting an EIN just to move the audit along if it wasn't required for that tax year. That could create unnecessary complications for future filings.