Tax-Exempt Organizations Must Notify IRS of Responsible Party Changes

The IRS recently posted a news release reminding tax-exempt organizations of the requirement to notify the agency whenever there’s been a change to their responsible party.

IRS regulations require businesses and tax-exempt organizations with employer identification numbers (EIN) to update their responsible party information within 60 days of any change, by filing Form 8822-B, Change of Address or Responsible Party – Business. It’s critical the agency has accurate updated information on file in the unfortunate event of identity theft or other fraud issue related to EINs or business accounts.

For tax-exempt organizations, the responsible party is generally the same as the “principal officer” as defined in Form 990, Return of Organization Exempt from Income Tax, instructions. The definition states that a principal officer is “an officer of the organization who, regardless of title, has ultimate responsibility for implementing the decisions of the organization's governing body, or for supervising the management, administration or operation of the organization.”

For those tax-exempt organizations whose governing body changes regularly, it may be a best practice to include Form 8822-B within the orientation packet to ensure the IRS notification doesn’t get missed. Please reach out to us if you have any questions relative to this or any other tax-exempt organization matter. 

With one of the largest regional tax practices in the country, Schneider Downs Tax Advisors’ personal focus on clients and in-depth understanding of current issues ensures that clients are complying with tax-filing requirements and maximizing tax benefits. Our industry knowledge and focus ensure the delivery of technical tax strategies which can be implemented as practical business initiatives. Learn more at www.schneiderdowns.com/tax-services.