Critical Deadline for those with Employer Identification Numbers

If you have an entity with an Employer Identification Number, you need to be aware of an upcoming deadline regarding reporting of responsible party changes that happened prior to 2014.

In 2013, the Internal Revenue Service issued final regulations on what it considered to be a problem with nominee-issued Employer Identification Numbers (EIN).

To deal with the problem, the IRS first revised Form SS-4, Application for Employer Identification Number, to require the disclosure of the applicant's "responsible party" name and identification number. Recently, the IRS also introduced Form 8822-B to keep track of responsible party changes, (which must be disclosed within 60 days of the change) and to record changes in address and location. The use of Form 8822-B is mandatory, beginning January 1, 2014, for any entity with an EIN.

Deadline Nearing

However, there is also a retro-active condition that must be considered. If the latest responsible party change was made prior to 2014, and such change has not been previously provided to the IRS, the change must be reported to the IRS using Form 8822-B before March 1, 2014.

A responsible party is defined in the instructions for Form 8822-B as:

• For all entities, other than SEC types-"the person who has a level of control over, or entitlement to, the funds or assets of 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."

IRS Comments

While tax returns and return information are generally confidential, the IRS says the information included on Form 8822-B may be made available to the Department of Justice, other federal agencies, cities, states, the District of Columbia, and U.S. commonwealths and possessions to carry out their tax laws. The information may also be provided to other countries under tax treaty provisions, for enforcement of criminal laws, or to combat terrorism.

It should be noted that the instructions to Form 8822-B contains the following comment, "You will not be subject to penalties for failure to file this form. However, 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. Despite the failure to receive such notices, penalties and interest will continue to accrue on any tax deficiencies."

What You Should Do

If you have an entity with an EIN, it is suggested that you do the following:

• Review the responsible party designation on any Form SS-4 filed prior to 2014 to determine if a change needs to be reported before March 1, 2014.
• For all entity acquisitions made after January 1, 2014, consider the need to file Form 8822-B within 60 days of such acquisition.
• For all changes in senior management made after January 1, 2014, review the last provided responsible party disclosure (Form SS-4 or Form 8822-B), and consider the need to file Form 8822-B within 60 days of such management change.

If you have any questions, please contact your Eide Bailly tax advisor.