Citing what it calls “a key security issue,” the Internal Revenue Service (IRS) recently issued a statement reminding businesses and organizations with Employer Identification Numbers (EIN) to update information on file within 60 days whenever a change occurs to a responsible party or a responsible party’s contact information.
Most churches possess an EIN, either because they employ people, file employment tax returns, or hold bank or brokerage accounts. Consequently, any church possessing an EIN must comply with the updating requirements.
A failure to do so could mean the church “may not receive timely notices of deficiencies or demands for taxes from the IRS, which can lead to penalties and additional interest charges,” noted attorney, CPA, and senior editor Richard Hammar in a 2014 article.
Inaccurate or outdated information also can cause a “time-consuming process to identify the point of contact so the IRS can inquire about a suspicious filing,” the agency said in its recent statement.
Starting in August of 2021, the IRS will begin sending letters to about 100,000 EIN holders who appear to have outdated information about their responsible parties.
Obtaining and maintaining an EIN
An EIN is obtained by filing a Form SS-4. The application requires disclosing the name and Taxpayer Identification Number of an individual deemed responsible for the entity.
The IRS notes it defines “the responsible party as the individual . . . who ‘controls, manages, or directs the applicant entity and the disposition of its funds and assets.’” If more than one person qualifies for the role, the IRS instructs the employer to “list whichever party the entity wants the IRS to recognize as the responsible party.”
In churches, Hammar notes that the responsible party should be someone possessing direct authority “to act unilaterally with respect to the management of church assets,” such as a church treasurer, lead pastor, or member of the church board.
When the responsible party changes, or the responsible party’s contact information changes, the IRS must be notified within 60 days through the filing of a Form 8822-B.
The Form 8822-B was introduced in early 2014 after the IRS dealt with numerous challenges related to the previous way EIN holders notified it about changes.
Employers with EINs that are no longer in use should promptly close the accounts by following these instructions, the IRS said.
The agency also provides a short video further explaining the EIN.
Hammar’s 2014 article also provides answers to seven questions church leaders have about the EIN, Form SS-4, and Form 8822-B.