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EIN Responsible Party: Who can be the Responsible Party for your LLC?
1. The information below is written in the context of forming an LLC.
2. Make sure your LLC is approved before getting an EIN. You don’t want to get an EIN first and then later find out your LLC filing was rejected by the state. Exceptions are a Louisiana LLC and a West Virginia LLC.
This is the IRS’s definition of the EIN Responsible Party:
“The “responsible party” is the person who ultimately owns or controls the entity or who exercises ultimate effective control over the entity. The person identified as the responsible party should have a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the person, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets. Unless the applicant is a government entity, the responsible party must be an individual (i.e., a natural person), not an entity.“
That definition is likely confusing and will leave you scratching your head.
Here’s the simplified version for an LLC:
The EIN Responsible Party for an LLC must be one of the LLC Members (owners of the LLC).
The EIN Responsible Party is the IRS “Contact Person”
An easy way to think of the EIN Responsible Party is that it’s the IRS’s “contact person” for the LLC.
It’s the person whom the IRS will send mail and correspondence to, either providing information to the LLC or requesting information from the LLC.
Who can be the Responsible Party for an LLC?
The EIN Responsible Party for an LLC must be an LLC Member (owner).
• In a Single-Member LLC, the EIN Responsible Party must be the sole LLC Member.
• In a Multi-Member LLC, the EIN Responsible Party must be one of the LLC Members. Although any LLC Member can be listed, the person listed will take on the responsibility of making sure the LLC’s taxes are handled properly.
The IRS uses different titles for LLC Members (owners)
Although at the state-level, the official title for an owner of an LLC is “Member”, at the federal-level, things are spoken about differently at the IRS.
Let’s get you familiar with the IRS’s language, so you’re not confused if you have to call them.
• In a Single-Member LLC, the IRS refers to the LLC Member as the “owner“.
• In a Multi-Member LLC, the IRS refers to the LLC Members as the “partners“.
Can the Responsible Party be an LLC Manager?
If your LLC is Manager-Managed, it depends on whether or not the Manager is also a Member.
• If your LLC Manager is NOT a Member of your LLC, then they can’t be the Responsible Party.
• If your LLC Manager is ALSO a Member of your LLC, then they can be the Responsible Party. Just list them (or any other LLC Member) as a “Member” when filing the application for the Responsible Party
If your LLC is Member-Managed, you don’t need to worry about this. Just list an LLC Member as the Responsible Party.
(related article: Member-managed LLC vs Manager-managed LLC)
The EIN Responsible Party can’t be an entity (company)
The IRS made changes to the EIN Application that went into effect on January 1st of 2018.
The EIN Responsible Party must now be an individual person. It can’t be a entity (company).
To quote the IRS definition:
“Unless the applicant is a government entity, the responsible party must be an individual (i.e., a natural person), not an entity.“
Instructions for Form SS-4 (12/2017), see “Responsible party defined“.
The IRS allowed 16 months for “adjustment time”
After the IRS changes a rule that has been in place for a while, they often allow the public some time to become aware of the new rule (before strictly enforcing it). During that “adjustment time”, the IRS still accepted EIN applications with entities as the Responsible Party, however, the IRS issued an update (effective May 13th, 2019), stating this rule will now be strictly enforced.
Meaning, the EIN Responsible Party for an LLC (or other company) must be a person. It can’t be a company. We’ve explained this in more detail here: The IRS May 2019 requirements for EIN applications (and why most websites are wrong).
Note: If you are a non-US resident or non-US citizen and you don’t have an SSN or ITIN, you can still get an EIN for your LLC. This rule/enforcement doesn’t affect you being the Responsible Party for your LLC. For more information, please how can I get an EIN for my LLC without an SSN or ITIN.
Who can be the Responsible Party for an LLC owned by another LLC?
If you have one LLC (the “Child”) that is owned by another LLC (the “Parent”):
- you can’t list the Parent LLC as the Responsible Party for the Child LLC; and
- you can’t list the Parent LLC’s EIN on the new Child LLC’s EIN Application
This used to be allowed, but as of 2018, this is no longer the case.
Unless the LLC obtaining the EIN is a government entity (which will not be the case for 99% of our readers), the EIN Responsible Party must be a natural person. This means the Responsible Party must be an individual and can’t be a company.
Again, even though the LLC applying for a new EIN is owned by another LLC, you’ll need to list an individual person as the EIN Responsible Party. So in this case, you should just list one of the owners (Members) of the Parent LLC.
Only 1 Responsible Party is needed
The IRS only needs one (1) Responsible Party on file for your LLC’s EIN.
If your LLC is a Multi-Member LLC, the IRS doesn’t need the contact information of all the LLC Members. They just want one Responsible Party on file with the EIN.
The other LLC Members will be listed in your LLC Operating Agreement.
The EIN Responsible Party is not personally liable for IRS tax debt
A lot of readers wonder if listing themselves as the EIN Responsible Party will automatically make them personally liable if the LLC defaults, avoids, or evades taxes with the IRS by the fault of another LLC Member (in a Multi-Member LLC).
Just being listed as the EIN Responsible Party doesn’t automatically make you personally liable for the LLC’s IRS tax debts.
However, that doesn’t mean you won’t receive letters from the IRS and have to present yourself in tax court (in more serious circumstances) in order for it to become a fact that you are not personally “responsible” (personally liable) for the LLC’s tax debt.
The following two terms have different meanings:
- EIN Responsible Party
- “responsible” person
In tax court, it could be determined that the person listed as the EIN Responsible Party is not actually personally “responsible” for the LLC’s tax debt (if another Member knowingly lied or avoided paying/filing LLC taxes with the IRS).
Again, the easiest way to think of the EIN Responsible Party is it’s the “contact person” between the LLC and the IRS.
In a Multi-Member LLC, the person listed as the EIN Responsible Party should be the one willing to take on the role/responsibility of making sure all taxes are filed correctly and paid on time.
In a Single-Member LLC, as the owner, you must be the EIN Responsible Party. And just like in a Multi-Member LLC, you are not automatically personally liable for your LLC’s tax debts, however, if you knowingly lie or avoid paying/filing taxes with the IRS, then the IRS will go after you personally.
How to update/change the EIN Responsible Party for an LLC
To change the EIN Responsible Party for your LLC, you need to file Form 8822-B with the IRS.
Download Form 8822-B:
Leave Boxes 1-3 unchecked and then enter your LLC name and EIN on lines #4a and #4b. Then leave #5, #6, and #7 blank.
Enter the Responsible Party’s name in #8 and their SSN or ITIN in #9.
In the “Signature” section, enter the Responsible Party’s phone number. This can be a cell, home, or office number. Then have the Responsible Party sign and enter today’s date.
– use “Owner” if you have a Single-Member LLC taxed as a Sole Proprietorship
– use “Partner” if you have a Multi-Member LLC taxed as a Partnership
– use your officer title if you have an LLC taxed as a C-Corp or S-Corp
8822-B Mailing Address:
Look at the bottom of Page 1 of 8822-B to determine where to mail the form to the IRS.