As of May 2013, the IRS now requires all employer identification number (EIN) holders to provide updated responsible party information. A revised version of Form 8822-B is now available. The revised form includes instructions describing the frequency and manner in which taxpayers who are affected by the new requirement must provide the updated information. In the event that a business’ responsible party changes, the form must be completed and submitted within 60 days of the change. If a change in the responsible party has occurred prior to 2014 and the entity had not previously filed Form 8822-B, the deadline for the form is March 1, 2014, and only the most recent change must be noted.
Definition of Responsible Party
The responsible party can differ depending on the business type. In the case of entities that have interests or shares that are registered with the SEC or are traded on a public exchange, the definitions are as follows:
- In a corporation, the responsible party is the principal officer.
- In a partnership, the general partner is considered to be the responsible party.
- In the case of a disregarded entity, the owner is the responsible party. If the owner is a corporation, the corporation’s name and EIN should be entered on the responsible party change form.
- In a trust, the responsible party is the grantor, trustor, or owner.
For other entities, the responsible party is the individual who has a level of control over or entitlement to the entity’s funds or assets that enables the person to directly or indirectly control, direct, or manage the entity. If the individual who is the responsible party is an alien, the entity is required to provide the person’s individual tax identification number along with a copy of an identifying document. If necessary, the entity must complete and submit Form W-7 to apply for an individual tax identification number.
Although use of Form 8822-B is mandatory if a responsible party change has occurred in an entity that has an EIN, failure to submit the form will not automatically result in the entity being penalized. However, if the responsible party does not receive a notice of deficiency or demand for tax due to failure to provide a current mailing address, interest on the unpaid amount will accrue. Overall, businesses should include filing Form 8822-B within their work plan whenever a change in ownership results in a responsible party change.
