IRS regulations require businesses, partnerships, trusts and estates, charities, and other entities with Employer Identification Numbers or EINs to update responsible party information within 60 days of any change by filing Form 8822-B, Change of Address or Responsible Party – Business. It is critical that this information is accurate in cases of identity theft or other fraud issues related to EINs or business accounts.
If the responsible party information is inaccurate or out of date, this leads to a time-consuming process to identify the point of contact so the IRS can inquire about a suspicious filing.
Last month the IRS began sending letters to approximately 100,000 EIN holders where it appears the responsible party is outdated. All EIN applications (mail, fax, electronic) 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.