When filing for an Employer Identification Number (EIN), which is required for purposes of tax administration, the applicant must disclose the name and taxpayer identification number (e.g., Social Security Number, Individual Tax Identification Number, or EIN) of the principal officer, general partner, grantor, owner, or trustor of the entity. This individual or entity is termed the “responsible party.” If an entity has more than one responsible party, the entity may designate a responsible party from among such persons.
Beginning January 1, 2014, every entity is required to report any change in the identity of its responsible party on Form 8822-B, Change of Address or Responsible Party—Business, within 60 days of the change. If the change occurred prior to January 1, 2014, however, the entity has until March 1, 2014 to file Form 8822-B.
Form 8822-B and its instructions may be accessed via the IRS website, accessible here.
Although, as of the date of this alert, there is no penalty for failing to timely file Form 8822-B, if an entity fails to file Form 8822-B and update the IRS with new responsible party information and, as a consequence, the new responsible party does not receive a notice of deficiency or demand for tax, penalties and interest will accrue notwithstanding that the entity’s new responsible party did not receive these documents.
Accordingly, all businesses with an EIN should consider reviewing the responsible party information that was originally submitted on Form SS-4 or previously updated via Form 8822-B, to determine whether any revisions are necessary. Further, businesses should consider reviewing responsible party information and filing a new Form 8822-B whenever there is a change in ownership, management, or other situations that might result in a new responsible party.
Information about obtaining an EIN and who to designate as a responsible party can be found on the IRS website, accessible here.