The IRS requires that a person or entity possessing an IRS employer identification number (“EIN”) has 60 days in which to report a change in its “responsible party” designation using an IRS Form 8822-B. Further, beginning May 13, 2019, the “responsible party” can no longer be an entity but must be an individual. Currently, the IRS is not imposing penalties for failure to notify it of this change, but the IRS has cautioned that an applicant may not receive a notice of deficiency or notice of demand for tax if it does not have a current “responsible party” designation on file.
A “responsible party” designation is part of the IRS application process to obtain an IRS EIN for a person, organization, estate, trust, plan, or entity. You cannot open a financial account without an IRS EIN. Since 2010, the IRS has asked for the name and social security number (if an individual), Individual Taxpayer Identification Number (if an alien), or employer identification number (if an entity) of the “responsible party” (“RP”) of the applicant submitting the Form SS-4, Application for Employer Identification Number (EIN). The IRS made the change to better facilitate communication with applicant representatives regarding tax reporting and compliance issues.
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