Responsible Parties and Designated Officials

The IRS requires every corporation to designate an initial “Responsible Party” when applying for an Employer Identification Number (EIN). The position theoretically requires little or no action, creates no personal liability, and only provides the IRS with a point of contact. But the Responsible Party must remain generally available and inform the entity when a new person is needed. The corporation may still give someone else power of attorney to interact with the IRS on behalf of the entity in certain specified ways for a limited period of time.

Who Is a Responsible Party?
The Responsible Party must be an individual who (1) has a social security number (SSN) or tax identification number (TIN), and (2) is willing to act as the Responsible Party. This person is appointed by the Board, often as a consequence of holding a key upper management position. The Instructions for Form SS-4 (Rev. 12- 2025) explain:

“Responsible party defined. 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.
…
For tax-exempt organizations, the responsible party is generally the same as the “principal officer” as defined in the Form 990 instructions.”

The current pertinent IRS Instructions for Form 990 provide a two-part definition:
“A principal officer…is a person who has ultimate responsibility [1] for implementing the decisions of the organization’s governing body,
or
[2] for supervising the management, administration, or operation of the organization.”

The Principal Officer is named at the top of the Form 990 return, but does not need to sign it so long as another authorized officer does. There may be more flexibility in choosing a Principal Office than designating a Responsible Party. A hands-on Executive Director may possibly serve as a Principal Officer without being able to “control, manage, or direct the entity and the disposition of its funds and assets” and thus qualify as a Responsible Party

Identifying the Responsible Party
As part of the online SS-4 application for an EIN the corporation must identify, by both name and social security number, the Responsible Party. This person should be appointed, before the application, by a Board resolution which indemnifies and holds the Responsible Party harmless. Unless the position is expressly tied to service as a particular Officer, a short agreement is appropriate which requires the Party to notify the corporation of any change of address, contact information, or ability to serve.

Changing the Responsible Party
The corporation must always have a Responsible Party, so if the person originally designated resigns, leaves the entity, or is no longer the proper person for some reason, a new Responsible Party must be appointed by the Board. The entity must then report any changed Responsible Party information to the IRS within sixty (60) days of the change, using Form 8822-B. See, 27 CFR §301.6109-1(d)(2)(ii).

Because the IRS Instructions tell us the Principal Officer shown on the 990 is “generally” the Responsible Party, whenever a new Principal Officer is identified in a new 990 filing, the Board should consider changing the Responsible Party. The change would then be reported within 60 days following Board action.

Who is a “Designated Official” for an IRS Business Tax Account?
Tax-exempt organizations can now obtain and maintain an IRS online Business Tax Account. The application process requires the entity to identify a “Designated Official” who is to be given full access to information. The definition is looser than that for Responsible Party, and the Official does not need to be the entity’s Principal Officer. The Designated Official for a tax-exempt corporation must be either:
(1) an Officer, such as the President (or CEO), Vice President, Treasurer (or CFO), Secretary, or Chief Operating Officer (or COO);
or
(2) the Board Chair.

The Designated Official can open the online corporate account, and will have
input and access to the company’s profile, account balances, payment history, tax
records, IRS communications, and certain other documents. With accounting guidance
every Board should consider opening a Business Tax Account and appointing a
Designated Official. See, www.irs.gov/businessaccount