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February 2014

Form 8822-B Due March 1, 2014 to Report Change of Responsible Party


A new IRS mandate effective in 2014 requires holders of employer identification numbers (EINs) to maintain a “responsible party” on file with the IRS. Generally, the responsible party is the “principal officer,” “general partner” or “owner” as specifically defined in IRS Form 8822-B and the associated instructions. Generally, the responsible party is the person that has the authority to directly or indirectly control, manage or direct the business or the entity and the disposition of its funds and assets. This information was intended to be initially provided with the entity’s application for an EIN on Form SS-4. However, (1) the responsible party may have changed over time (for example, due to personnel turnover or business restructuring), and (2) the IRS has found that the party on file with the IRS is often not the person currently responsible for the business and is frequently a “nominee” – someone granted limited authority used only during the business formation process. 


So what does this mean for you? Unless you are confident that the current responsible party as indicated on your original Form SS-4 is correct (and you may not have a copy of the form on hand to look at), we recommend that all EIN holders update the responsible party with the IRS by filing Form 8822-B, Change of Address or Responsible Party – Business. Although this is a recent IRS requirement, the due date to file Form 8822-B for any required updates to a responsible party is March 1, 2014. This requirement applies to all holders of an EIN, including individuals who have an EIN for the conduct of a business reported on Schedule C and all entities, even entities which are disregarded or included within a consolidated filing. When completing Form 8822-B, persons designated as the responsible party must report their social security number, EIN or ITIN. Note the responsible party may still be the entity’s principal officer, general partner, grantor, owner or trustor, assuming this party meets the definition above. Once Form 8822-B is filed with the IRS, you are only required to resubmit the form within 60 days of a change in responsible party.


Reprinted with permission by McGladrey LLP.

TSCPA Urges Lawmakers to Protect State and Local Sales Tax Deduction

Last week, TSCPA asked leadership of the Senate Finance and House Ways & Means Committees to support bipartisan legislation that would permanently extend the option to deduct state and local sales tax from federal income taxes, which expired at the end of 2013. Without it, our tax law effectively discriminates against individuals living in Texas and other states that have chosen, for whatever reason, to finance their state budgets with sales tax revenue rather than alternative sources, such as income taxes or property taxes. TSCPA encourages lawmakers to support S. 127 (or S. 41 with substantially identical language) and companion bill H.R. 2854 to provide tax fairness and certainty for millions of citizens in Texas and nationwide.

Read TSCPA’s Letter


Federal Appeals Court Holds IRS Can't Regulate Unenrolled Tax Return Preparers

A federal appeals court in Washington, D.C., held that the Internal Revenue Service exceeded its statutory authority when it issued regulations in 2011 attempting to regulate unenrolled tax return preparers by requiring them to pass a certification test, pay a fee and take continuing education courses. The IRS has been enjoined from imposing the rules on unenrolled return preparers ever since it lost in a lower court in January 2013; that decision has now been affirmed.

Journal of Accountancy article

TSCPA Thanks Lawmakers for Supporting Bills to Deduct State and Local Sales Taxes

TSCPA recently expressed appreciation to some Texas legislators for their support on a bipartisan effort to permanently extend the election to deduct state and local general sales taxes. TSCPA sent a thank you letter to Senator John Cornyn, cosponsor of S. 41 and S. 127. Letters also went to cosponsors of the House companion bill H.R. 2854: Reps. Mike Conaway (R-11), Kay Granger (R-12), Ralph Hall (R-4), Ruben Hinojosa (D-15), Michael McCaul (R-10), and Filemon Vela (D-34). The deduction was temporarily extended through 2013 in The American Taxpayer Relief Act of 2012, only to expire again, leaving millions of taxpayers in Texas and other no-income-tax states with uncertainty about this important benefit.
Read the letters to House members.
Read the letter to Cornyn.