Self-employed individuals, small businesses, and enterprise entities can prevent being penalized by the IRS for TIN discrepancies with real-time TIN Matching.
There are a variety of ways to ensure that your TINs are correct and your returns don’t bounce back with incorrect TIN citations. However, even the most carefully-drafted returns can be rejected due to something as simple as an incorrect TIN.
Millions of businesses around the country file their 1099 forms with the IRS and as a part of the reporting regime, the businesses also report the 1099 vendor’s TIN in the 1099-NEC and 1099-MISC forms. Businesses are required to report the payee’s TIN in the “Recipient’s TIN” box of the form.
But what would happen when you forget to report a TIN? Or worse, what would happen if you do a report a TIN and turns out it’s incorrect?
You’re hit with B-notices, such as CP2100 and CP2100A, penalties for willful disregard, and some more back and forth with the IRS. If this is not overwhelming enough, the IRS initially penalizes the taxpayer with a $270 penalty for the TIN discrepancy.
But it doesn’t stop there.
This penalty will continue to accrue interest until the case is validated and deemed void by the IRS or until you file the correct returns with accurate information.
So, here’s some light to alleviate you from this gloomy situation.
What Is TIN Matching?
In a nutshell, TIN Matching is a practice where you validate a TIN by checking it against the official records of the IRS.
To elaborate, businesses obtain their recipient TINs from, well, their recipients (vendors or freelancers or contractors) through a W-9 form. These obtained TINs are validated with a TIN Matching system, where you search the taxpayer identification number (TIN) and the legal name of the recipient.
How Do You Match A TIN?
The TIN Matching system runs your inputs by the IRS database to find an exact match to your query. When the TIN/name combination you’ve provided matches the combination in the IRS database, it’s a TIN match.
But sometimes, when the contractor or the vendor doesn’t provide the accurate details, your information may not match the IRS records, making it a TIN mismatch.
Do You Need TIN Matching?
Every single business that is paying more than $600 to payees in the course of business is required to report such compensations on 1099 forms. And when such information is reported on the 1099 forms, the IRS also requires the taxpayer (the filer) to report the corresponding recipient’s tax and legal information, which are the TIN and the legal name of the vendor (payee).
Every business needs TIN matching because it allows the businesses to verify the validity of the TIN and the legal name of the vendor prior to reporting, and successively, filing.
To reiterate, businesses need TIN Matching to obtain the correct TINs from the vendors and to report the correct TINs on the information returns.
How To Get Vendor TINs?
Form W-9 is used by businesses to obtain TINs from vendors, freelancers, contractors, and consultants. Businesses can simply email the Form W-9 or mail the physical document to the recipient’s address.
The vendor is responsible for completing the W-9 form with accurate information (in accordance with the IRS or social security records). The completed W-9 form must be sent back to the payer (the business) for validation and reporting.
How To Validate Bulk TINs At Once?
What exactly do we mean by real-time?
It means your TIN match queries are answered with the latest, updated records of the IRS, giving you accurate results.
But as the number of TINs you have to validate increases, you have to expand your search volume. Let’s say your business is dealing with 200 independent contractors. Manual TIN Lookup will be a hassle and consume hours of your productive time. And let’s not forget the extra stress on your teams to ensure TIN accuracy.
Bulk TIN Matching solutions from Tax1099 allow you to search as many as 100,000+ TINs in just a minute and the best part is that you don’t have to wait for hours or days to get the results. You’ll get the TIN match results in 30 seconds or less, giving you accurate results efficiently.
Our time-effective TIN matching system is used by small entities, large enterprises, the biggest players in the fintech market, and of course, self-employed individuals who work with other independent contractors.
So, in order to prevent penalty assessments from the IRS for TIN discrepancies, TIN matching is your answer