New IRS Form 8822-B Requires Action By Virtually All Organizations
In an effort to update its records, the IRS is requiring any organization or entity that obtains an employer identification number (EIN) to report to the IRS a change in the "responsible party" within 60 days of that change. This change is reported using Form 8822-B, Change of Address or Responsible Party - Business. This is a good thing as it helps to provide assurance that critical communications from the IRS will not be directed to a person who is no longer associated with an entity. However, in its efforts to update contact information, the IRS is requiring virtually every entity to provide current information.
Who is a "Responsible Party"
Currently the application for an EIN requests the name and identifying number of the "responsible party". This is defined to be as the person who has a level of control over, or entitlement to, the funds or assets in the entity and the disposition of its funds and assets. This is a fairly general definition and may actually apply to multiple people within an entity. However, when applying for the EIN, an entity is only required to list one responsible party. In essence, this is listed as the primary contact for the entity and provides assurance that mail sent from the IRS will be directed to someone with enough authority to deal with the issue at hand.
Why does this affect so many entities?
The complication enters the picture with the direction from the IRS that if the "responsible party" has changed prior to 2014, then the entity must file the Form 8822-B no later than March 1, 2014. Prior to January 2010, the term "responsible party" did not exist. Therefore, it can be presumed that if an entity obtained its EIN prior to January 2010, it should file the Form 8822-B by March 1, 2014 to declare its "responsible party". If an entity gained its EIN after January 2010, then it should check its application to see who was listed as the "responsible party" to determine if the filing is required. For the future, entities should understand that the "responsible party" must be updated in the event the listed party leaves the entity.
The form is used for both updating the "responsible party" for an entity as well as updating the address for an entity. It may be obtained at www.irs.gov for download. Contact your CPA or attorney, if your entity needs assistance in determining its reporting requirements.