New IRS Reporting Requirement

Effective January 1, 2014, the IRS now requires each organization (including churches and charges) that has a federal Employer Identification Number (EIN) to update the name of its "Responsible Party" that was reported to the IRS at the time the EIN was requested. A Responsible Party is an individual who has direct or indirect authority over the organization and its assets. Basically, the IRS wants the name and Social Security Number of a specific person it can contact if something is amiss concerning the organization. However, many organizations requested their EIN long ago, and the names provided at that time as a Responsible Party may no longer be a Responsible Party (e.g., they may no longer work for the organization or, in some cases, they may even be deceased.)

To comply with this new regulation, organizations need to complete and submit IRS Form 8822-B to the IRS within 60 days, so the form is to be submitted before March 1, 2014.

According to the instructions for Form 8822-B, organizations will not be subject to penalties for failure to file this form. However, if they fail to provide the IRS with their current mailing address or the identity of a responsible party, the organization 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. So it is important that churches, especially those owing payroll or other tax payments to the federal government, file the form as required.

You can read the IRS definition of a Responsible Party in the instructions for Form 8822-B. As you know, our church structure and polity often does not fit neatly into governmental definitions and rules, so it is not fully clear who best fits that definition for local churches. However, based on advice from the UMC’s General Council on Finance and Administration (GCFA) Legal Department and the Wisconsin Conference Chancellor, we believe that the church (charge) treasurer should be the individual named as the Responsible Party. Further, we are recommending that the address for the Responsible Party be listed as C/O (in care of) the church name and address, rather than the treasurer’s home address, whenever possible.

Going forward, whenever there is a change in the Responsible Party, the IRS requires organizations to update that information with them by submitting a new Form 8822-B within 60 days of the change. The Conference Finance Office will assist with this by attempting to notify new church treasurers of this requirement at the beginning of each year, as well as individually mid-year, when we are notified of those changes.

If you have any questions about this new regulation or Form 8822-B, please contact Lisa King, Conference Treasurer, at 608-837-7320 or 888-240-7328 (toll-free).