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New IRS Form Begins March 2014
By Raul Rivera
The IRS has added a new form that most churches will have to file every time there is a change to the church’s responsible party. Ever since 2010, when a new organization applies for a Federal Tax ID Number (also known as the Employer Identification Number), they must fill out Form SS-4. In that form, they ask for the name and Social Security number of the responsible party. This is usually the person who has control over the assets of the organization, which in most cases is the pastor, treasurer, or some other officer. Treasury Decision (T.D.) 9617 now requires that you submit the updated information of the responsible party in your church every time that person changes. To do so, you must use Form 8822-B.
Who is a responsible party?
How do you know who is the responsible party for your church? In most cases that person is the pastor, or some other officer of the church. The IRS defines this person as follows:
The responsible party is the person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets.
After reading this definition, it is easy to assume that the pastor, or some other officer of the church, qualifies as the responsible party for the church. It is possible that there may be more than one person who qualifies under the definition above. When that happens, the IRS makes it clear that they only care to have just one person listed as the responsible party.
Why does the IRS need to know?
There have been mentions that the reason the IRS wants to know this information is so that they may contact the responsible person with notices. However, the form never asks for the responsible party’s address. The IRS claims that the reason it asks for the responsible party is so that correspondence sent to the church (at the church’s mailing address) will also have the name of the responsible party. They also claim it ensures that the right person in the church receives the notice. Additionally, further instructions state that if you “fail to provide the IRS with your church’s current mailing address or the identity of your responsible party, you may not receive a notice of deficiency or a notice of demand for tax.” Despite the failure to receive such notices, penalties and interest will continue to accrue on any tax deficiencies.
Form 8822-B
The IRS has issued instructions with the new form and has clarified that any organization that changes its “address or identity of their responsible party must file” Form 8822-B even if the organization is currently not active. If your ministry was started before January 1, 2014, the form was due by March 1st, 2014. If your ministry was started this year, then you have 60 days from the date of the change to file Form 8822-B.
The form itself is not very difficult to fill out. At the very top of the form it says to check the box if you are an exempt organization. Then in questions 8a, 8b, 9a, and 9b it asks you to list the name of the former responsible party as well as the new one. That could be a problem if you do not know who was originally listed as the former responsible party. For all the churches whom we have taken through our StartRIGHT program, do not worry; we have that information stored in our records. The only recommendation we can give at this time is that you leave lines 8a and 8b blank if you do not know who was the former responsible party and fill out lines 9a and 9b. The IRS does not give any instructions on what to do if you do not remember who the former responsible party was.
Keeping you up to date
At all of our conferences we always teach how important it is to keep your church in compliance with the latest changes of the law. This year, our conference materials will teach you the latest changes in the law as well as upcoming changes that will occur and how to prepare your church for them. You do not want to miss attending a conference this year.