Beginning on January 1, 2014, an entity with an employee identification number (“EIN”) is required to notify the Internal Revenue Service (“IRS”) of any change to such entity’s “responsible party.” An entity notifies the IRS by filing IRS Form 8822-B within 60 days of a change to such entity’s responsible party. If the identity of the responsible party changed prior to January 1, 2014 and the IRS has not yet been notified of such change, then IRS Form 8822-B must be filed before March 1, 2014 to report the most recent change.
The definition of responsible party depends on whether an entity’s shares or interests are traded on a public exchange or registered with the Securities and Exchange Commission (“SEC”). If an entity’s shares or interests are either traded on a public exchange or registered with the SEC, then the responsible party is (a) the principal officer (if such entity is a corporation), (b) the general partner (if a partnership), (c) the owner (if disregarded), or (d) a grantor, owner or trustor (if a trust). For all other entities, the responsible party is the person who has a level of control over, or entitlement to, the funds or assets of such entity that, as a practical matter, enables such individual to, directly or indirectly, control, manage, or direct the entity and the disposition of its assets.
Failure to file IRS Form 8822-B will not result in any direct penalties. But if not filed, the IRS may be unable to timely provide you with a notice of deficiency or a demand for taxes. Despite the IRS’s inability to provide timely notice, interest and penalties will continue to accrue on any such notice or demand.