The Internal Revenue Service is worried that as many as 100,000 small businesses and other taxpayers with Employer Identification Numbers (EINs) haven’t kept up with their contacts for tax records.
They’ll be getting letters in the mail beginning this month – and, yes, this inquiry is legitimate.
Whom are we talking about? In general, you know who you are, as the saying goes. Most individual taxpayers file their tax returns using their Social Security Number for identification. But some legal entities including small businesses, trusts, estates, charitable organizations, use EINs.
Here’s the problem. The IRS requires someone with power to manage or direct the company/group to be the “responsible party” for each EIN it issues. Usually, that’s a top officer or partner, trust owner, estate executor, etc.
The IRS figures that about 100,000 EINs now have an outdated officer listed. With the letter, it’s prompting those businesses to sign a correct name on the dotted line now. Actually, the IRS points out it is supposed to be informed within 60 days of any change in the responsible party.
How can the EIN holder catch up? There’s a form, of course. It’s IRS Form 8822-B, called “Change of Address or Responsible Party – Business.” See https://www.irs.gov/forms-pubs/about-form-8822-b
Fixing the wrong name is more than a paper chase, the IRS says. In cases of suspicious tax filings or potential identity theft, the agency can lose time tracking down a current contact for the EIN business, the agency said in a recent announcement.
By the way, if the company or partnership goes out of business, it also is supposed to deactivate its EIN.
EricJohn Ltd. is experienced in handling tax issues for small business, partnerships and trusts with EINs. Feel free to contact Eric Buechler, an enrolled agent recognized by the IRS.