The IRS recently adopted a final regulation requiring companies (and individuals) to update the information provided in the application for their employer identification number. You can read the final rule here.
The final regulation states the following basis for the rule:
Some EIN applicants continue to list individuals temporarily authorized to act on behalf of EIN applicants (sometimes referred to as “nominees”) as principal officers, general partners, grantors, owners, and trustors on EIN applications. The listing of nominees or other individuals who are no longer associated with the entity prevents the IRS from gathering and maintaining correct and current information with respect to the responsible party for the EIN applicant. The requirement in the final regulations to provide updated application information will allow the IRS to ascertain the true responsible party for persons who have an EIN. This knowledge will prevent unnecessary delays by allowing the IRS to contact the correct persons when resolving a tax matter related to a business with an EIN. In addition, this information will help the IRS combat schemes that abuse the tax system through the use of nominees, which results in the concealing of the true responsible party for entities that hide assets and income.
The rule requires updates “in the manner and frequency required by forms, instructions, or other appropriate guidance,” so the frequency of updates required is not known at this time. The IRS estimates the additional burden of 15 minutes per year.
My take: this is not a significant burden, rather, it is simply something businesses need to be aware of and add to the list of paperwork items that should be checked on an annual (pending additional guidance) basis.
Latest posts by Bryan Willis (see all)
- An Example of Why You Should Have An Attorney Draft Your Will - June 12, 2018
- How to Keep Your Family Together During the Probate Process - May 21, 2018
- Understanding the Standard Possession Order for Child Custody in Texas - May 10, 2018