Are you a recently added responsible party for an organization, or more importantly, one who is no longer associated with the group? The Internal Revenue Service urges those entities with Employer Identification Numbers (EINs) to update their applications if there has been a change in the responsible party or contact information.
When the responsible parties information needs to be updated, it’s important to change responsible party information within 60 days of any alteration by filing Form 8822-B, Change of Address or Responsible Party – Business. The IRS uses this information to verify who is associated with a business or organization and prevent cases of identity theft or other fraud issues related to EINs or business accounts.
The data around the “responsible parties” for business-type entities is often outdated or incorrect, meaning that the IRS does not have accurate records of who to contact for identity theft issues. This means a time-consuming process to identify the point of contact so the IRS can inquire about a suspicious filing.
As a result, the IRS intends to step up its awareness efforts aimed at businesses, partnerships, trusts and estates, charities and other entities that are EIN holders. Starting in August, the IRS began sending letters to approximately 100,000 EIN holders where it appears the responsible party is outdated.
All EIN applications (mail, fax, or electronic submission) must disclose the name and Taxpayer Identification Number (Social Security number, Individual Taxpayer Identification Number or EIN) of the true principal officer, general partner, grantor, owner or trustor.
The IRS defines the responsible party as the individual or entity who “controls, manages, or directs the applicant entity and the disposition of its funds and assets.”
Unless the applicant is a government entity, the responsible party must be an individual, not an entity. If there is more than one responsible party, the entity may list whichever party the entity wants the IRS to recognize as the responsible party.
EINs are to be used strictly for tax administration purposes. Entities with EINs that are no longer in use should close their IRS tax accounts and follow steps outlined at Canceling an EIN – Closing Your Account.