What is TIN Matching?
TIN Matching is a online service from the IRS that allows users to validate the legal name and TIN listed on a vendor’s W-9 form with the IRS database. A TIN number is a Taxpayer Identification Number and includes both a Social Security Number and an Employer Identification Number. The legal name, TIN and TIN type (1=EIN, 2=SSN, 3=Unknown) is entered into the IRS TIN Matching system and the IRS returns a code between 0 and 8. This code will tell you whether the name/TIN match combination matches IRS records. See the graphic below that details the nine possible codes.
Why should I TIN match?
One of the most common errors made on 1099 reporting is a mismatch between the TIN number and name. The name provided doesn’t belong with the TIN. Single-member LLCs often get this wrong. They don’t want to provide their Social Security Number so they list their individual name on Line 1 but provide the Employer Identification number of the LLC.
The IRS will easily catch these errors and send out CP2100 notices (error notices) to the companies that issued the 1099s. These error notices come with a new set of complex requirements including the need to withhold 24% from future vendor payments and send vendor B notices within 15 days. The 24% in backup withholding has to be remitted to the IRS per a strict Form 945 deposit schedule and there are additional annual solicitation requirements.
The bottom line – If you don’t follow the B notice requirements correctly, your company is subject to additional penalties and interest that relate to just the B notice process. TIN matching in advance of filing your 1099s with the IRS will reduce both the time you have to spend on the B notice process and the risk of IRS penalties and interest.
The best practice is to individually TIN match each W-9 form as received and then bulk TIN match all of the payees at year-end that will be sent a 1099 form. This will ensure that all of the name/TIN combinations are correct on the 1099s submitted. Note that TIN matching may only be done for vendor payments which might be reportable on a 1099 at year-end and are subject to backup withholding provisions. See IRS section 3406(b)(1).
TIN matching process
Participants log into the IRS e-services application and then access the TIN matching application.
Interactive TIN matching – Twenty five name/TIN combinations can be entered for an immediate response.
Bulk TIN matches – A .txt can be submitted to the IRS with up to 100,000 W-9 name/TIN combinations and will receive a 24-hour response.
Click here to go to the TIN matching application.
Access to TIN matching application
It is difficult and time-consuming to obtain IRS authorization to the TIN matching program. So it is important to request access months in advance of your need. The employee applying for TIN matching must provide their own personal information to the IRS to access the TIN matching site. The information required includes the employees mobile number and specific personal financial account numbers. Two-factor authentication must also be set up. Apply for access to the IRS TIN Matching application at IRS.gov.
W9manager bulk TIN matching service
W9manager provides a third-party TIN matching solution. This is typically used by subscribers that don’t want to provide personal information, don’t have the time to set up an IRS TIN matching account or don’t have the quantity of TIN matches that necessitate an account. W9manager offers a bulk TIN service that will TIN match up to 100,000 W-9 name/TIN combinations at one time. Click here to learn more.
What if I TIN match and still get a CP2100 notice?
IRC Section 6724 provides that any penalties under Section 6721 may be waived if the payer shows the failure to file a correct TIN on a 1099 return was due to reasonable cause and not willful neglect. Payers who use the TIN Matching system may establish due diligence and reasonable cause if the information contained in their records matches IRS records.
See Publication 2108A for complete information on the TIN matching program.