Businesses Have 60 Days to Notify the IRS of Changes in Contact Information and Responsible Party
Article Highlights
- Employer Identification Numbers (EINs)
- Contact Information
- Update Responsibilities
- ID Theft and Fraud Issues
- Responsible Party
- Filing Tips
- Updating Individual Contact Information
Calling it a key security issue, the IRS is urging those entities with EINs to update their applications if there has been a change in the responsible party or contact information. It is critical that the IRS has accurate information in cases of identity theft or other fraud issues related to EINs or business accounts.
According to the IRS, the data around the "responsible parties" for business-type entities is often outdated or incorrect, meaning that the IRS does not have accurate records of who to contact for identity theft issues.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 results in a time-consuming process to identify the point of contact so the IRS can inquire about a suspicious tax filing.
It is estimated that there are approximately 100,000 EIN holders where it appears the responsible party information is outdated. The IRS is planning a mail campaign to these EIN holders in August.
Responsible Party - Generally, a responsible party is the individual (that is, a natural person) who ultimately owns or controls the entity or who exercises ultimate effective control over the entity. The person identified as the responsible party should have a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the person, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets.
- Tax-exempt organizations - the responsible party is generally the same as the “principal officer” as defined in Form 990 instructions.
- Trusts - the responsible party is a grantor, owner, or trustor.
- Decedent estates - the responsible party is the executor, administrator, personal representative, or other fiduciary.
- For publicly traded entities and government entities see the instructions with form SS-4 - Application for Employer Identification Number (EIN).
Here are some tips for completing the 8822-B (used by businesses):
- P.O. Box - Enter your box number instead of your street address only if your post office does not deliver mail to your street address.
- Foreign Address - Follow the country’s practice for entering the postal code. Do not abbreviate the country name.
- “In Care of” Address - If you receive your mail in care of a third party (such as an accountant or attorney), enter “C/O” followed by the third party’s name and street address or P.O. box.
- Signature - An officer, owner, general partner or LLC member manager, plan administrator, fiduciary, or an authorized representative must sign. An officer is a president, vice president, treasurer, chief accounting officer, etc. If you are a representative signing on behalf of the responsible party, you must attach to Form 8822-B a copy of your power of attorney. To do this, you can use Form 2848. The Internal Revenue Service will not complete an address or responsible party change from an “unauthorized” third party.
- See the instructions for filing Form 8822-B which are included with the form.
If you have a state filing obligation, you should also notify the appropriate state agencies of the changes.
After you file either the 8822-B or Form 8822, please forward a copy to this office so we can update your file. If you need assistance, please give this office a call.
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Frequently Asked Questions
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You can prepare your taxes yourself, especially if your business is simple.
But once you have contractors, employees, business loans, equipment purchases, mileage, mixed expenses, or growing revenue, things get more complex. At that point, tax preparation becomes a way to make sure your business is reported correctly, your deductions are handled properly, and your records can support what you file.
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Send anything that shows what your business earned, spent, bought, paid, borrowed, or changed during the year.
That usually means your income records, bank statements, credit card statements, payroll reports, contractor payments, loan documents, mileage records, and prior-year tax return. Also tell me about anything unusual, such as buying a vehicle, hiring someone, opening a new location, or taking out a business loan.
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Messy books can slow things down. If expenses are in the wrong categories, transactions are missing, or personal and business spending are mixed together, your tax return may not show the right profit. We may need to clean things up before filing, so your return is accurate and easier to support.
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Possibly, if it was truly for your business and you have proof.
Still, it is much better to avoid this when you can. A separate business bank account and business credit card make everything cleaner. They save time, reduce confusion, and make your records much easier to defend if anyone ever asks questions.
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Most small business owners can deduct ordinary business expenses like software, advertising, supplies, insurance, rent, payroll, contractor payments, professional fees, travel, and some vehicle costs.
The question I usually ask is simple. Was this expense clearly for the business? If yes, we can look at how it should be handled. Personal expenses should stay personal.
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