Outdated “Responsible Party” Information May Slow Down Your Tax Refund

August 11, 2021

By Miri Forster

Identity theft and fraud issues have challenged the IRS for years. These issues significantly impact the time it takes for the IRS to process a tax return and issue a tax refund. In an effort to combat this key security issue, the IRS is urging corporations, partnerships, trusts and estates and other entities with Employer Identification Numbers (EINs) to update their information if there has been a change in the responsible party or contact information. This month, the IRS will send letters to approximately 100,000 taxpayers with EINs where there are indications the responsible party and address information appear to be outdated.

The “responsible party” is the person who controls, manages, or directs the entity and the disposition of its funds and assets. Unless the EIN applicant is a government entity, the responsible party must be an individual, not an entity.  The responsible party is also the person the IRS contacts for tax issues related to that EIN.  If there is more than one responsible party, the entity decides which person it wants the IRS to recognize as the responsible party.

Assignment of an entity’s responsible party is first made when an entity applies for an EIN by filing Form SS-4.  Taxpayers are required to update their responsible party and address information within 60 days of a change.  Changes to the responsible party are made by filing Form 8822-B, Change of Address or Responsible Party-Business with the IRS.

About Miri Forster

Miri Forster, Co-Leader of the Tax Controversy practice, has over 20 years of experience providing tax dispute resolution services to public and private corporations, partnerships and high net worth individuals on a wide range of technical and procedural issues.