TIN Mismatch or Missing - IRS Notice CP-2100A

In the wake of 1099 season, many companies that issue payments to independent contractors are likely to see, at least once, the ominous  IRS Notice CP-2100A regarding missing or incorrect Tax Identification Numbers (TIN). The instructions included with this notice are fairly scattered, and often leave the recipient with more questions than answers. Ignoring a CP-2100 Notice, however, may result in penalties that can quickly add up.

Let's start by discussing why you received this notice in the first place.

1.  Either an incorrect Taxpayer Identification Number (EIN or SSN) was listed on a recipient's Form 1099, an incorrect TIN/SSN was provided by the payee, or both. With the vast amount of information input on the various 1099 forms, it is not uncommon for the issuer to make what the IRS refers to as a "clerical mistake" when completing a 1099 for a contractor. Likewise, it not uncommon for a contractor to provide incorrect information when submitting their W-9, whether intentionally or not.

2.  No TIN/SSN was listed on the Form 1099 when presented to the contractor, or when filed with the IRS (Form 1096). Best practices recommend obtaining a signed Form W-9 from all contractors prior to issuing the first payment for services. In a perfect world, this would happen with every contractor, on every job, every time. However, in a rush to begin or complete work, this step is sometimes overlooked, essentially leaving the filer with no option but to submit a Form 1099 without a TIN/SSN listed on the form.

What You Need to Do If You Receive a CP-2100A Notice … Simplified

Do not ignore the notice! Ignoring 1099 filing requirements may result in hefty penalties to your trade or business. The IRS takes 1099 compliance seriously and uses their resources to ensure businesses comply with the statutory requirements. Not doing so may result in penalties for late filing, failure to file, failure to include required information such as Tax ID Numbers (TIN), failure to correct an incorrect 1099, failure to file electronically, and failure to provide recipient copies. You -- as the taxpayer and payer -- are the ultimate party responsible for your meeting filing and reporting requirements. ASAP's 1099 Processing services do not eliminate your liability and ASAP is not responsible for penalties that are incurred because of missing or incorrect information. 

Check page 1-2 of your notice. (Note: Page 1 & 2 do not include the cover page and instructions, and are often the following pages)

Missing TIN(s): If the header of page 1-2 lists the Payee TIN Status as  "Missing TIN(s)", a TIN/SSN was never provided.

Recommended Actions:
  1. Check your records to confirm if the contractor's W-9 info (TIN/SSN/Name/Address) has been updated in your records. If it has, retain a copy of this notice in the vendor's file and take no further action.
  2. If you are still missing the W-9 info for the contractor, you need to take action to demonstrate to the IRS that you have made attempts to solicit this updated information. Written/emailed requests, with a blank W-9 attached, will best demonstrate your attempts to correspond with the contractor. Be sure to keep a scanned or printed copy of this correspondence for your records.
  3. If the contractor is still receiving payment, or scheduled to receive future payments, you may move to backup withhold. If you backup withhold, you are required to report this withholding via IRS Form 945, and in box 4 (Federal Income Tax Withheld) of the contractors' Form 1099-MISC for that year, if applicable. It is recommended that you inform the contractor of your intent to backup withhold.
Incorrect Name/TIN(s): If the header of page 1-2 lists the Payee TIN Status as "Incorrect Name/TIN(s)", an incorrect TIN/SSN was provided and does not match what the IRS has on file for the contractor.

Recommended Actions:
  1. Check your records to confirm if the contractor's W-9 info (TIN/SSN/Name/Address) has been updated in your records. If it has, retain a copy of this notice in the vendor's file and take no further action.
  2. If you are still missing the W-9 info for the contractor, you need to issue what is commonly referred to by the IRS as a "First B Notice". The purpose of this form is to notify a contractor that backup withholding will begin if current W-9 information is not provided in a timely manner. (Click HERE to download a copy of the official IRS First B Notice)
  3. If W-9 info is still not provided per the First B Notice request, you should issue a Second B Notice and move to backup withhold. If you backup withhold, you are required to report this withholding via IRS Form 945, and in box 4 (Federal Income Tax Withheld) of the contractor's Form 1099-MISC for that year, if applicable. It is recommended that you inform the contractor of your movement to backup withhold. (Click HERE to download a copy of the official IRS Second B Notice)

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