Several times each year we receive letters form the IRS for former clients who failed to update the IRS of changes in their contact information. The result of failing to keep the IRS, or any other regulator, apprised of new contact information can be devastating – including loss of exemption.
Perhaps as a result of the revocation of exemption of hundreds of thousands of nonprofits, the IRS is making new efforts to ensure that the right person is contacted when they are trying to resolve a matter with your nonprofit. Specifically, starting January 1, 2014, an entity must report any change in its “responsible party” within 60 days of the change using IRS Form 8822-B. In addition, if a nonprofit changed its responsible party prior to 2014, the change must be reported to the IRS now.
So who is your nonprofit’s responsible party? The IRS defines “responsible party” as a person who has a level of control over the funds or assets in the entity that enables the individual to directly or indirectly “control, manage, or direct the entity and the disposition of its funds and assets.” Your nonprofit initially told the IRS who its responsible party was when it applied for its taxpayer identification number or “EIN.” This is the person the IRS will contact if it needs to reach the organization.
If you need help determining who can serve as your nonprofit’s responsible party, contact us.