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Wednesday, September 7, 2022

IRS Form 8822-B: Change of Address or Responsible Party 

Have you found yourself on hold with the IRS for a substantial amount of time in hopes of making changes to your organization’s records or to request important documentation only to hear the IRS specialist tell you that you are not authorized to call or receive information on behalf of your organization? Keep reading to understand why it is important to keep information up to date with the IRS to avoid delays in obtaining and making changes to important tax-related materials. 

The Internal Revenue Service (IRS) requires any organization that has obtained, or will obtain, an Employer Identification Number (EIN) to name an individual as the “Responsible Party” for the entity, providing his/her Social Security Number (SSN). The IRS defines a responsible party as:  

the person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets.” (See Form SS-4 Instructions, page 3) 

In general, the Responsible Party is an individual who has direct or indirect authority over the organization’s finances. The IRS wants an individual recognized at the organization who it can contact if needed. It is simply the person designated and authorized to contact, receive communications, and make changes with the IRS on behalf of the organization.  

Who should be the Responsible Party for a local church? 

As you know, our church structure and polity doesn’t fit neatly into government definitions and rules, so our (non-legal) opinion is that the persons who best fit the definition of a Responsible Party for annual conferences and local churches are their respective treasurers. This person, more than anyone else in their respective entities, could be said to directly or indirectly “control, manage, or direct the entity and the disposition of its funds and assets.” While they are certainly “closer” to controlling, managing, or directing the disposition of assets as opposed to the entity itself, arguably they indirectly do the latter as well. Regardless, the IRS wants a name and a SSN of a person associated with the organization with authority to make financial decisions.  

IRS Requirements 

Beginning in 2014, the IRS requires any entity with an EIN to report a change in its Responsible Party within 60 days of the change. There is not a direct penalty for non-compliance with this requirement although per IRS Form 8822-B, “if you fail to provide the IRS with your current mailing address or the identity of your responsible party, you may not receive a notice of deficiency or a notice of demand for tax.” Your organization can request a change in Responsible Party, and a change of address, by submitting IRS Form 8822-B. When completing the form, be sure to check the “tax-exempt organization” box at the top of the form. Further, Box 1 – “Employment, excise, income, and other business returns” should be selected if your organization is only reporting a change in its Responsible Party. Please refer to the bottom of the form for the correct mailing address to send the completed form. The IRS has indicated it should take 4-6 weeks to process these changes.  

Other Helpful Links 

Do You Need a New EIN? 

How to request a copy of EIN Letter (147C Letter) 

Apply for an EIN Online 

Form SS-4 PDF 

 

IRS Automatic Revocation of Exemption 

It is important to understand that your organization will be categorized as an entity that is required to file in the IRS system if your organization files even one time. This is the case even if your organization is not originally required to file but files anyway. If an organization is categorized as a filer, and it fails to do so for three consecutive years, its exempt status will automatically be revoked. If your organization is marked as a filer by mistake, you will need to contact the IRS to have this designation fixed before you stop filing. Although almost all churches and certain church-related organizations are exempt from filing an annual return or notice (IRS Form 990, 990-EZ, 990-PF, or Form 990-N) with the IRS, some are required (See Who Must File link below).  

Automatic Revocation List 

The IRS publishes and updates the Revocation List on its website monthly. This is the list of filers (whether accurately categorized as such or not) that have not filed for three consecutive years and thus whose tax-exempt status was automatically revoked (“auto-revoked”). It will also send a letter notifying your organization of this information. If your organization’s exempt status is auto-revoked, it is no longer exempt from federal income tax and ineligible to receive tax-deductible contributions. If your organization has obtained an individual exemption determination directly from the IRS, and its exempt status is auto-revoked, this information will be reflected on the IRS Select Check database, which is used by many charitable organizations to verify exemption status of an organization. Similarly, if your organization is included in the UM Group Tax Exemption Ruling (“Group Ruling”), and its exempt status is auto-revoked, GCFA is prohibited to issue your organization an updated Certificate of Inclusion letter until its exempt status is reinstated.  

Reinstating Tax-Exempt Status 

If your organization is notified that its exemption status has been automatically revoked, it must apply directly to the IRS to have its status reinstated, even if the organization was originally in the group ruling and never had to file an application with the IRS. If your organization is a group ruling subordinate, and you are notified of revocation, the Responsible Party should first try calling the IRS to see if it can be fixed over the phone before beginning the reinstatement process. \If you are not able to get this resolved by phone, you will find the process for reinstating in IRS Publication 4991. 

Other Helpful Links 

Who Must File?  

UM Group Ruling Application for Inclusion & Updated Letter

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