IRS Notification Regulations Applies to All Organizations with an EIN
The IRS has a new regulation that requires any organization with an employer identification number (EIN)
to notify the IRS when the "responsible party" changes. This became effective January 1, 2014 and organizations have 60 days to comply. The form for this is IRS Form 8822-B.
The General Council on Finance and Administration (www.gcfa.org) has detailed guidance for churches. This form will be available on the Mississippi Conference website along with links to the IRS form and instructions.
Here are the basics of this new requirement:
- Every organization with an EIN must comply with the new requirement. You should file this form if the responsible party has changed since January 1.
- By looking at the last filed 941, W-3 or 1096, you will find who signed the form. That is your current responsible party. If that person has changed or the church desires to change the responsible party, file the form making that election. Then going forward when the person in this role changes, a new form must be filed in 60 days.
- WHO SHOULD BE THE NEW RESPONSIBLE PARTY? Our General Council on Finance & Administration recommends that the treasurers of local churches serve as the responsible party. While I would concur with this recommendation, other leaders may share some responsibilities of leadership for internal control purposes. Other candidates might be the local church business administrator, the chair of finance or the trustee chair. I strongly recommend against pastors serving in this role, especially given our itinerant system.
- WILL SERVING AS THE RESPONSIBLE PARTY OPEN A PERSON TO TAX LIABILITIES OR PENALTIES? Not necessarily. Penalties are determined by the control over or entitlement to the assets of the organization. The responsible party without control or entitlement is simply the person designated to receive communications and contact the IRS on behalf of the organization.
- Form 8822-B is a simple form and should not cause a great deal of anxiety.
- Following are some instruction hints that may be very helpful.
- Check the box at the top of the form for "tax-exempt organizations."
- Check box #1. If your church has also changed locations or business addresses since last filing your Form 941 or 1099/1096, you will also need to check box #3. For most churches, only #1 will be necessary.
- Complete box #4a with the full legal name of your church/organization. This is the name you used on your form 941 or 1099/1096 last filed.
- Complete box #4b with your current EIN.
- If you have changed mailing addresses without notifying the IRS, also complete boxes 5 & 6. Complete line 7 if the business location has changed and is different from the mailing address. If not, simply proceed to box #8a.
- Name the previous responsible party. This is usually the previous treasurer. By looking at the last filed 941, 1099/1096 W-2/W-3, you will find a name who is the current responsible party. Box #9a does ask for that person's social security number. Do your best to provide it. Don't let obtaining this number hold up filing the form in this initial filing.
- Completely Box #8b and #9b with the new responsible party and his or her social security number.
- Have an authorized person sign and list a phone number for the organization. An authorized person may be the current treasurer, church council chair, finance chair or trustee chair. I would not have the signature of the person listed in 8b and 9b.
- Mail this form to Internal Revenue Service Ogden, UT 84201-0023