Notifying the IRS of a Change in your Nonprofit Organization’s “Responsible Party”

November 18, 2014Articles Nonprofit Roundup Blog

The IRS now requires nonprofit organizations to alert the IRS of any changes to the “responsible party” listed on nonprofit organizations’ EIN applications.

Almost all nonprofit organizations have an employer identification number, commonly referred to as an EIN. An EIN is essentially the nonprofit organization’s social security number and is needed to open a bank account, file a tax return and apply for tax-exempt status.

When applying for an EIN, a nonprofit organization must list an individual to act as the nonprofit organization’s “responsible party.” Typically, this individual is someone who exerts control over the nonprofit organization and its assets, such as the organization’s president or treasurer. This individual also signs the nonprofit organization’s EIN application.

If a nonprofit organization changes its responsible party, it must alert the IRS. A nonprofit organization can alert the IRS of the change by filing Form 8822B. The form should be filed within 60 days of the change. Thus, if your nonprofit organization designated its president as the “responsible party” and has since elected a new president, your organization may wish to file Form 8822B to update the IRS’ records.

Although there are no penalties for failing to alert the IRS of the change, the IRS will not abate any interest and/or penalties set forth on any notice of deficiency or notice of assessment if the notice is sent to the wrong responsible party.