Every church is required to have an Employer Identification Number (EIN) to open a bank account, put on IRS Form W-2 for their pastor and employees, and to transact other business. To get an EIN number for the church, assuming that you do not have one, a “responsible party” must complete a Form SS-4 or use the IRS electronic application form found at http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online.
Since 2010, the application for an EIN number has required the name and Social Security number of the “responsible party” making the application. A “responsible party” is defined as a person who has a level of control over the funds or assets of the entity. For a church, a “responsible party” would be the pastor, church treasurer, or maybe even a board member.
As you might imagine, the “responsible party” often changes in a church situation due to a number of reasons, including resignation and death – and further, prior to 2010, the IRS did not have information about a “responsible party” listed on the EIN applications. To address this issue and to maintain a contact person – or a “responsible party” – for each EIN issued, the Internal Revenue Service has adopted an entirely new requirement to alleviate this problem.
Beginning January 1, 2014, any entity with an EIN must file Form 8822-B to report the latest change to its “responsible party.” Form 8822-B must be filed within 60 days of the change. If the change in the identity of the “responsible party” occurred before 2014, and the church has not previously notified the IRS of the change, you should have filed Form 8822-B before March 1, 2014.
It should be noted that while it is mandatory that Form 8822-B be filed to note a change in the “responsible party,” there is currently no penalty for noncompliance.
The following suggestions are offered:
1.) Any church that received an EIN number prior to 2010 should complete a Form 8822-B immediately so that the IRS has a “responsible party” on file for the church.
2.) Any church who obtained an EIN since 2010 and has had a change in the “responsible party” should file a Form 8822-B immediately to name a new “responsible party.”
3.) Any church, regardless of when you received your EIN and you do not know if a “responsible party” was listed, should file a Form 8822-B immediately to name a new “responsible party.”
4.) If you believe that a former pastor may have been the “responsible party” listed on the EIN application, you should file a Form 8822-B immediately to name a new “responsible party.”
It actually may be good practice to consider filing a Form 8822-B going forward every time that your church has a pastoral change. Again, going forward, the Form 8822-B must be filed within 60 days of a change in the “responsible party.”
As mentioned earlier, there is currently no penalty for not updating the name of the “responsible party.” However, if the Internal Revenue Service does not have proper contact information, the church may not receive timely notices of deficiencies or demands for taxes from the IRS, and such may lead to penalties and additional interest charges.
While completing the Form 8822-B is a new requirement from the Internal Revenue Service, following through with such should keep the church adequately informed about tax matters impacting them.