Welcome to CPA at Law, helping individuals and small businesses plan for the future and keep what they have.

This is the personal blog of Sterling Olander, a Certified Public Accountant and Utah-licensed attorney. For over thirteen years, I have assisted clients with estate planning and administration, tax mitigation, tax controversies, small business planning, asset protection, and nonprofit law.

I write about any legal, tax, or technological information that I find interesting or useful in serving my clients. All ideas expressed herein are my own and don't constitute legal or tax advice.

Updating Business Names with the IRS

Every business has a name, and sometimes, that name needs to be changed. If the business operates through a legal entity, such as a corporation or LLC, then an amendment to the formation document must be filed with the state in which the entity has been formed in order to legally change the business name.

Doing this, however, does not change the business name on IRS records, meaning the name associated with the unique employer identification number for the business. The easiest way to update the IRS's records with the new business name is simply to use the new name when filing the business's annual tax return and check the box at the top of the front page of the form indicating that the business name has changed. There is no need to reference the old business name on the tax return.

But what if the business needs to change its name prior to the next tax return filing season, or what if the business is a disregarded entity that doesn't file a tax return? The IRS's instructions say to write them a letter; however, the instructions do not indicate what the letter should say, and they leave out an important step.

The most important items to include in a business name-change letter to the IRS are as follows: The EIN number for the business, the old business name, as well as the business address, all of which must match the current IRS records. The letter should explain that the business name has changed, state the new business name, and request that confirmation be sent once the IRS has updated its records.

The letter must be signed by the business owner or corporate officer that appears in IRS records as an authorized individual. According to some IRS agents I've spoken with, even an agent of the business that has a valid Form 2848 on file may not have sufficient authority to sign the name-change letter.

Finally, the business name-change letter should include a copy of the stamp-filed document with the state that effectuated the name change. This is not mentioned as a requirement on the IRS's website, but failure to include this document can result in the IRS declining to make the name change. Sole proprietorships or general partnerships obviously cannot include such a document, but all other business entities should do so. Name change letters currently take about six weeks to be processed; don't wait that long only to have the IRS request additional information.