IRS First b Notice – IRS Tax Help Representation – Former IRS – Fresh Start Tax LLC

Each year financial institutions by law are required to mail out thousands of Form 1099s to customers, the most common of which are often the 1099-INT.

This federal form is issued by payor, including banks and financial institutions which pay interest income greater than $10.00 during the year.

The following information applies to different types of 1099 forms as it relates to the appropriate actions and related penalties regarding filing 1099 forms with improper taxpayer identification number  information.

For all bank and financial institutions a initial solicitation for a TIN or a Social Security Number, employee identification number is typically requested, using  the Form W-9, when a customer/client opens an account or when a banking or financial transaction happens.

Each year, the IRS issues CP2100 Notices (for more than 250 incorrect Form 1099s) or CP2100A Notices (for fewer than 250 incorrect Form 1099s) informing financial institutions they may be responsible for backup withholding as a result of missing or inaccurate TINs discovered when processing the Form 1099 information returns.

Common and Frequent questions

What is a Taxpayer Identification Number (TIN)?

A TIN is one of the following four numbers.

1.  A Social Security Number (SSN)
2. An Employer Identification Number (EIN)
3. An IRS individual taxpayer identification number (ITIN). Aliens who do not have an SSN, and are not eligible to get one should get an ITIN. Form W-7, Application for IRS Individual Taxpayer Identification Number, is used to apply for an ITIN
4. An Adoption Taxpayer Identification Number (ATIN). An ATIN is a temporary tax identification number issued for a child born in the U.S. An ATIN is used as an identifying number is the child is not eligible for an SSN.

When is a TIN considered missing or incorrect?

IRS considers a TIN to be missing if it is not provided.

IRS also consider a TIN to be missing if it has more or less than nine numbers or it has an alpha character as one of the nine numbers.
Incorrect TIN

IRS considers a TIN to be incorrect if it is in the proper format but the name/TIN combination doesn’t match or can’t be found on IRS or SSA files.
How do I know if a TIN on my account is incorrect?

We will send you a CP2100 or a CP2100A Notice and a listing of incorrect name/TINs.

What should I do if a payee refuses or neglects to provide a TIN?

Begin backup withholding immediately on any reportable payments. You should do the required annual solicitation (request) for the TIN.

Continue to Backup Withhold until you receive a TIN.

Can a payee claim he or she is exempt from backup withholding?

Yes. Payees who may be exempt are listed in the Instructions for the Requester of Form W-9. They include tax exempt organizations, government agencies, corporations, and other listed entities.

Is a payee an exempt corporation if it uses the term “Company” or “Co.” in its name?

A payer cannot treat a payee as an exempt organization merely because the business name contains the words “Company” or “Co.” A payer can only treat the payee as exempt if:

The name contains the term insurance company, indemnity company, reinsurance company or assurance company.

What is a “B” Notice?

A “B” Notice is a backup withholding notice.

There are two “B” Notices

1.  The First “B” Notice and the Second “B” Notice. You must send the First “B” Notice and a Form W-9 to a payee after you receive the first CP2100/CP2100A Notice with respect to this account for the purpose of soliciting a correct name/TIN combination.

2. The text of the Second “B” Notice is different than that of the First “B” Notice.

It tells the payee to contact IRS or SSA to obtain the correct name/TIN combination. The mailing of the second notice should not include a Form W-9.

You must send the second B Notice after receiving the second CP2100 or CP2100A with respect to this account. The payee must certify the Name/TIN combination after receiving the second “B” Notice.

You do not have to send a “B” Notice more than two times within three calendar years to the same account.

What should I do if a “B” Notice is returned as “undeliverable?”

You must begin backup withholding. However, try to get the correct address for the payee and re mail the notice. If you can’t find the correct address, keep the undelivered notice with your records.

After I receive a CP2100 or CP2100A notice, when do I start and stop backup withholding?

You must backup withhold on all reportable payments to the payee 30 business days after you have received the CP2100 or CP2100a Notice.

You should stop  all backup withholding on payments after 30 calendar days after you have received the required certification (Form W-9) form payee or TIN validation form the SSA or the IRS, if it was a second notification.

At your option you may start and stop backup withholding at any time during these 30 day periods.

What are the first and second annual solicitation requirements?

A solicitation is a request for a payee’s correct TIN. You must make the request to satisfy the backup withholding requirements and to avoid a penalty for filing another information return with a missing or an incorrect TIN.

The Payee must furnish certified TIN (first solicitation) on Form W-9 with respect to payments of interest, dividends, and amounts subject to broker reporting. For other payments, the payee may furnish/provide a TIN in any manner.

Does a CP2100 or CP2100A Notice indicate whether it is the first or second notification of an incorrect TIN for a specific account?

No. The backup withholding regulations provide that payers are responsible for tracking the status of the notices they receive.

What is the relationship between the requirement to make an annual solicitation for a payee’s TIN and the requirement to send a “B” Notice?

Sending a “B” Notice to a payee in response to a CP2100A or CP2100 Notice also satisfies the annual solicitation requirement to avoid a penalty for filing another information return with an incorrect TIN.

Why are accounts I corrected still on the listing of missing or incorrect TINs?

Due to processing cut-off points, a listing may or may not reflect your latest corrections. If you know that an account was corrected, do not send a “B” Notice to the payee.

What should I do if a TIN was actually on file but it was left off the Form 1099 or reported incorrectly?

Make any required change to your records and use the correct information on future filings. Do not send a “B” Notice to the payee.

IRS First b Notice – IRS Tax Help Representation – Former IRS – Fresh Start Tax LLC