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The "responsible party" is the individual or entity that controls, manages, or directs the entity and the disposition of the entity's funds and assets, unlike a nominee, who is given little or no authority over the entity's assets.
A responsible party is the individual who controls and manages a business entity and its funds and assets. The IRS makes a distinction between a responsible party and other individuals for purposes of securing an employer identification number (EIN).
adjective [verb-link ADJECTIVE] B2. If someone or something is responsible for a particular event or situation, they are the cause of it or they can be blamed for it. [...] Collins COBUILD Advanced Learner’s Dictionary.
When you apply for an EIN, also known as a Federal Tax ID Number, you’ll need to designate a Responsible Party to IRS. This individual is tasked with managing, directing, and/or controlling the entity associated with the EIN. Suppose there are multiple individuals involved in running the entity.
To answer that question, you have to know what a Responsible Party is. Generally speaking, there are a number of documents in which someone will sign as a Responsible Party, but a lot of the time, who the Responsible Party is or how Responsible Party is defined can be blurred.
According to the IRS, a responsible party is an individual who has the authority and responsibility to ensure that a company's employment taxes are paid on time. This person is usually an officer, director, or employee of the business who exercises significant control over its financial affairs.
Your responsible party is the person the IRS will contact concerning your EIN or any tax-related issues. You will also need to include the responsible party’s tax ID number (social security number, ITIN, or EIN) on the form. Learn How to Get an EIN.