We believe that you must obtain a tax ID number for a land trust, as you would for any other type of trust. The Customer Identification Program (CIP) rules require that you obtain a tax ID number from all customers, including trusts.
Whether that tax ID should be a social security number or a separate Employer Identification Number (EIN) depends on how the trust’s tax return is filed. A land trust has no special distinction in the Internal Revenue Code and may be a simple, complex, or grantor trust depending on the terms of the trust instrument.
Tax filing requirements depend on the type of trust. For example, certain simple and complex trusts are required to file Form 1041. Every trust that is required to file Form 1041 must have an EIN. Therefore, if a simple or complex land trust is required to have an EIN, you should obtain that number as part of your CIP.
In contrast, grantor trusts are not required to file a Form 1041 and so avoid the EIN requirement. For land trusts that are structured as grantor trusts, we believe that the social security numbers of the grantors (the individuals creating the trust) would suffice for a tax ID in completing your CIP.
For resources related to our guidance, please see:
- 31 CFR 1020.220(a)(2)(i) (CIP rules require name, address, and tax ID number for each customer, including persons other than an individual such as a corporation, partnership, or trust)
- IRS, Abusive Trust Tax Evasion Schemes – Special Types of Trusts (“The ‘land trust’ has no special distinction in the Internal Revenue Code and would be a simple, complex, or grantor trust depending on the terms of the trust instrument. Filing requirements would depend on the type of trust.”)
- IRS Form 1041, Specific Instructions, Employer Identification Number (“Every estate or trust that is required to file Form 1041 must have an EIN.”)
- IRS Form 1041, General Instructions, Who Must File, Trust (“The fiduciary (or one of the joint fiduciaries) must file Form 1041 for a domestic trust taxable under section 641 that has: 1. Any taxable income for the tax year, 2. Gross income of $600 or more (regardless of taxable income), or 3. A beneficiary who is a nonresident alien.”)
- IRS Form 1041, General Instructions, Special Reporting Instructions, Grantor Type Trusts (“In general, a grantor trust is ignored for income tax purposes and all of the income, deductions, etc., are treated as belonging directly to the grantor. This also applies to any portion of a trust that is treated as a grantor trust.”)
- IRS Form 1041, Specific Instructions, Schedule K-1 (Form 1041) (“Grantor type trusts don't use Schedule K-1 (Form 1041) to report the income, deductions, or credits of the grantor (or other person treated as owner)”)