We wanted to alert you to a new Internal Revenue Service (IRS) regulation requiring organizations, including churches, to notify the IRS of changes to an organization’s “Responsible Party” (the individual who has direct or indirect authority over the organization and its assets).
Last year, the Treasury Department issued Treasury Decision 9617, requiring each organization with an EIN to update the name of its Responsible Party by filing IRS Form 8822-B. Effective January 1, 2014 organizations have sixty (60) days to comply with the new requirement to update Responsible Parties. Going forward, whenever there is a change of Responsible Party, organizations must update that information using form 8822-B within sixty (60) days of the change. This form is very straightforward. Churches should be sure to check the “tax exempt organization” box at the top of the form, and if they are only reporting a change in Responsible Party, they should also check Box 1 (“Employment, excise, income, and other business returns”).
Although there are no direct penalties for failure to comply, if the organization does not provide the name and address of the Responsible Party, it may not receive notifications from the IRS such as a notice of tax deficiency or notice of demand for tax, which in turn may result in penalties and interest accruals on any tax deficiencies.
