Business Entities: Beware of New Reporting Requirement for Change of Mailing Address, Business Location or Responsible Party
If you are an employer in San Jose, you are most likely aware that on January 1, 2014, the minimum wage increased to $10.15 per hour for your business; California's minimum wage increase was to $9 per hour. In addition to new employment laws, there, there have been other new laws that affect businesses in 2014, such as the all new California limited liability company act. But one law actually applies to all business entities with an Employer Identification Number ("EIN"), including entities such as corporations, partnerships, limited liability companies, and even nonprofit organizations. As of January 1, 2014, any entity with an EIN must notify the IRS of a change of (1) a mailing address, (2) a business location or (3) the identity of a "responsible party." A change in a company's mailing address or business location is pretty clear, but the identity of a responsible party may not be so clear.
If you are not sure who the "responsible party" was initially, check the Form SS-4 application that was filed initially by the organization to obtain its EIN, and it will be the person or entity listed as responsible on that form. Then, look at the instructions to Form 8822-B to determine if your responsible party has changed. The instructions define a responsible party as "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." If the entity's original responsible party at the time of filing the Form SS-4 is no longer affiliated with the organization or no longer fits that definition, then the entity must use Form 8822-B to let the IRS know.
Form 8822-B must be filed within 60 days of the change. If such a change occurred before January 1, 2014, and the entity has not previously notified the IRS in some other manner, Form 8822-B must be filed before March 1, 2014. If you no longer have a copy of the SS-4 Application or remember who was named as the "responsible party," you may wish to file a Form 8822-B before March 1, 2014.
So, if you are a corporation or LLC making changes on your Statement of Information filing with the California Secretary of State, or if you are amending your LLC operating agreement or your corporate documents, keep in mind that you may also need to notify the IRS of the change. If you are not sure whether your company needs to notify the IRS or other agencies of changes, or if you have questions regarding the "responsible party" for your business, you may wish to consult with a business lawyer or accountant.
The information appearing in this article does not constitute legal advice or opinion. Such advice and opinion are provided by the firm only upon engagement with respect to specific factual situations. Specific questions relating to this article should be addressed directly to the author.