Notices of Possible Name/TIN Discrepancy

Each year the IRS issues discrepancy notices for prior year information returns that contained missing or incorrect taxpayer identification numbers (TIN).  Upon receipt of the “Notice of Possible Payee Name/TIN Discrepancy” (notice number CP-2100), the IRS procedure requires each recipient to compare their records with the information furnished by the IRS.

There are two separate procedures that must be followed depending on whether the Payee Name/TIN listing agrees or disagrees with your records. Additionally, you must determine whether this is the first or second time within three calendar years that the IRS has notified you of incorrect information for the payee.

If it’s the first time you have received a “Notice of Possible Payee Name/TIN Discrepancy” for the payee, the following steps should be taken:

  1. Compare the listing enclosed with the notice with the W-9 you received from each payee
    1.  If they do not match because you made an input error when the 1099 was issued, the IRS made a processing error, or if the payee information changed after you filed the 1099, you do not have to do anything.
    2. If they do match, you must
      1. Send a First B-Notice and a Form W-9 within 15 business days from the date of the notice
      2. Update your records with the corrected information you receive from the payee
      3. If you do not receive a signed Form W-9 in response to the First B Notice, within 30 business days from the date you received the notice, you must begin backup withholding at a rate of 28%.  You must stop backup withholding once you receive a signed Form W-9.

If this is the second time you have received a “Notice of Possible Payee Name/TIN Discrepancy” from the IRS for the same payee, the following steps should be taken:

  1. Compare the listing enclosed with the notice with the W-9 you received from each payee
    1. If they do not match because you made an input error when the 1099 was issued, the IRS made a processing error, or if the payee information changed after you filed the 1099, you do not have to do anything.
    2.  If they do match, you must
      1. Send a Second B-Notice within 15 business days from the date of the notice (do NOT include a Form W-9)
      2. The payee must go to their local SSA office to have the social security number validated or get an IRS letter 147C
      3. If you do not receive a social security number validation or a letter 147C within 30 business days from the date you received the notice, you must begin backup withholding at a rate of 28%.  You must stop backup withholding once you receive a social security number validation or a letter 147C.

Do not:

  1. Amend the 1099 or
  2. Mail any of the documentation to the IRS

 

If you have any questions regarding this information or would like assistance with preparing and sending B-notices, please contact our office at (239) 433-5554.  Our team of professionals welcomes the opportunity to discuss your specific situation further. You may also visit us on the web at www.markham-norton.com.