TIN Matching will help taxpayers perfect their payee data before filing Form(s) 1099 with the Internal Revenue Service (IRS) and Form(s) W-2 with the Social Security Administration (SSA). Let’s discuss TIN Matching Frequently Asked Questions (FAQs) to understand more about the IRS TIN Matching Process and how it works.
TIN Matching Frequently Asked Questions
1. What is a TIN?
The term “TIN” is defined as the identifying number assigned to a person under Internal Revenue Code, Section 6109.
Specifically, a TIN may be a Social Security Number (SSN), Employer Identification Number (EIN), Individual Taxpayer Identification Number (ITIN), or Adoption Taxpayer Identification Number (ATIN).
A valid Social Security Number may only be issued by the Social Security Administration. An EIN, ITIN or, ATIN may only be obtained through the Internal Revenue Service.
2. What are the requirements for providing a payee TIN to the IRS?
The requirements for providing a payee TIN to the IRS are discussed below,
As per Internal Revenue Code (IRC) Section 6109(a) (1) provides that any payer required to file an information return must include the payee’s correct TIN.
IRC 6109(a) (2) requires the payee to furnish their correct TIN to the payer.
IRC Section 6109(a) (3) requires a payer to request a payee’s TIN and include it in any returns filed with the IRS.
IRC Section 3406(a)(1)(A) provides that reportable payments are subject to backup withholding if the payee does not provide a correct TIN to the payer.
The payer is required to withhold 28% of a reportable payment if the TIN is not provided at the time of the payment.
IRS sends a CP2100 or CP2100A, “Notice of Possible Payee TIN Discrepancy”, to payers if the TIN/name combination on the information return does not match IRS tax records.
Once a payer receives a “Notice of Possible Payee TIN Discrepancy”, for a payee, the payer is required to track whether or not another is received within 3 years.
If another “Notice of Possible Payee TIN Discrepancy”, for that payee is received, the second notice requires the payer to backup withhold on any proceeds disbursed to the payee until IRS gives permission to stop, even if a Form W-9 is provided by a payee.
3. What is a Form W-9?
Form W-9, “Request for Taxpayer Identification Number and Certification”, certifies the payee’s name and TIN, that the payee is not subject to backup withholding, and they are a U.S. person, including a U.S. resident alien.
4. What is the penalty for a payer who furnishes an incorrect name/TIN to the IRS?
IRC Section 6721 provides that a payer may be subject to a penalty for failure to file a complete and accurate information return, including a failure to include the correct payee TIN.
The penalty is $260 per return, with a maximum penalty of $250,000 per year ($100,000 for small businesses).
The penalty for intentional disregard is $530 per return, with no maximum penalty.
5. How does the IRS differentiate between an ‘invalid’ and a ‘missing’ TIN?
A missing TIN is either completely missing, or contains invalid characters such as alphas or hyphens.
An invalid TIN is one that doesn’t match IRS records for that name/TIN combination. A TIN not currently issued cannot be found in either IRS or SSA records.
6. Who will be able to use the TIN Matching Program and how will it help me to reduce errors on my payee TINs?
TIN Matching assists the payer in determining if the payee TIN/name combination contained on their Form W-9, matches the TIN/name combination contained in IRS tax filing records.
NOTE: The TIN Matching program currently cannot enroll payers who do not submit at least one of these seven forms, nor employers submitting Forms W-2, to use the TIN Matching system.
Payers may only perform TIN Matching for the TIN/Name combinations for income subject to backup withholding and reported on Forms 1099-B, DIV, INT, MISC, NEC, OID, 1099-K, G, and/or PATR.
7. What is an authorized agent?
An individual or company contracted to transmit information returns to the IRS on behalf of the payer firm.
This would include third-party service providers, transmitters, service bureaus, etc.
An authorized agent must perform TIN Matching research under the account established by the payer firm through eServices.
8. How does TIN Matching over the Internet work?
Enrolled users may TIN Match in one of two ways:
a) Interactively – a user can submit up to 25 name/TIN combinations at a time during a session, and receive a response within 5 seconds.
b) Bulk – users may download .txt files composed of up to 100,000 name/TIN combinations and receive a response from the IRS within 24 hrs.
c) Tax1099 TIN Match API – Businesses that have large vendor lists and very little time on their hands need an effective advantage that will enable them to conduct IRS TIN search effortlessly using Tax1099’s bulk Tax ID Verification API.
9. What type of response will users receive?
The TIN Matching program provides a numerical response indicator for each match request.
The potential responses include:
‘0’ – Name/TIN combination matches IRS records
‘1’ – Missing TIN or TIN not 9-digit numeric
‘2’ – TIN not currently issued
‘3’ – Name/TIN combination does NOT match IRS records
‘4’ – Invalid request (i.e., contains alphas, special characters)
‘5’ – Duplicate request
‘6’ – (Matched on SSN), when the TIN type is (3), unknown, and a matching TIN and name control is found only on the NAP DM1 database.
‘7’ – (Matched on EIN), when the TIN type is (3), unknown, and a matching TIN and name control is found only on the EIN N/C database.
‘8’ – (Matched on SSN and EIN), when the TIN type is (3), unknown, and a matching TIN and name control is found on both the NAP DM1 and the EIN N/C databases.
10. What happens if the name/TIN combination matches IRS records, and I still receive a CP2100 or CP2100A Notice for a specific payee TIN?
IRC Section 6724 provides any penalties under Section 6721 may be waived if the payer shows the failure to file a correct TIN on an information 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.
11. Are there any costs to the payer using TIN Matching?
No. At the present time, the IRS does not impose any monetary charges for use of the TIN Matching system.
12. How do I apply to the IRS TIN Matching Program?
Application for the TIN Matching program may be made after successful completion of the two-step eServices Registration process.
13. Is the use of the TIN Matching program mandatory?
TIN Matching is a free assistance tool developed by eServices as a service to our customers. The use of the program is completely voluntary and players do not face the possibility of increased penalties if they do not participate in the program.
14. What are the hours of operation for the TIN Matching system?
Payers will have access to the TIN Matching system 24 hrs a day, 7 days a week. There may be short time periods during the evening or night hours while data files are updated that TIN Matching may be briefly unavailable.
15. How does Interactive TIN Matching work?
Once you have been established as a user on the TIN Matching system, you will log in with the username and password you established during the registration process.
Upon login, users must accept the TIN Matching Terms of Agreement. You will then be prompted to enter a TIN Type, TIN, and Name to be matched against IRS records.
You may enter up to 25 TIN/Name combinations during each session. Once you enter “Submit”, the system will return the TIN/Name combinations along with the “Match Indicator” to tell you whether or not the combination matched IRS records.
You also have the option of entering each TIN/Name combination individually if you want to do a “Print Screen” and file each printout with the payee’s records in order to establish due diligence.
16. How does the Bulk TIN Matching work?
In bulk TIN Matching, you may attach a .txt file with up to 100,000 TIN/Name combinations to be matched. The .txt file will be formatted as follows:
TIN Type (1 = EIN, 2 = SSN, 3 = Unknown)
TIN (9 digits Taxpayer Identification Number)
Name * (up to 40 characters)
Account Number (optional field for your use – up to 20 Alpha/numeric – NOTE: the system will not read this information)
A semi-colon (;) will be the delimiter between fields. Each line of input will signify a new record.
Example: TIN Type; TIN; Name; Account Number
TIN Type; TIN; Name; Account Number
TIN Type; TIN; Name;
TIN Type; TIN; Name; Account Number
TIN Type; TIN; Name;
If you submit a record without the required fields (TIN Type, TIN, Name), the response you will receive will be Indicator 4, Invalid Request.
If you don’t know the TIN Type, enter “3” and the system will check both the SSN and EIN master files. Within 24 hours, the response will be sent to a secure mailbox and an email notification will be sent to you indicating a response is waiting.
You will have 30 days to access and download the results file. Once accessed, the results are retained for 3 days before being purged. The same information you sent in the .txt file will be returned with one additional field containing the results indicator.
It’s recommended to use Tax1099 TIN Matching API for bulk TIN Matching requirements.
17. What happens if I submit just the TIN or the name? Will IRS provide the correct name or TIN that is associated with the information I submit?
You must submit a TIN/Name combination. If you leave either the TIN or name blank, the system will consider it invalid (Indicator 4). Due to privacy issues, IRS will not divulge an entity’s name or TIN.
Caution: If you submit the same TIN with various names, or, the same name with various TINs, after four attempts, the system will automatically suspend your access to TIN Matching for 96 hours. This was done to prevent “phishing”.
18. Is there a limit to the number of bulk files I can upload each day?
No. There is currently no limit. Once the system has been fully implemented, and there are many users logged in, the time it takes to upload files may slow somewhat. At this time, e-Services does not plan to restrict the number of file uploads per day for any user.
19. What is the process for enrolling in IRS TIN Matching?
Initially, users must register online with e-Services and will create a User Name, Password, and PIN that will allow them to access the system electronically.
Once the online registration is completed, users receive, at their home address, a confirmation token that they must validate online within 28 days of the initial registration.
All users within a firm must complete their own registration to have an eServices account established for their individual username and password.
Once users are confirmed, the Principal, (person at your firm responsible for completing the TIN Matching application and assigning user roles), will complete the application and all confirmed users may begin using Interactive or Bulk TIN Matching that same day.
20. When will TIN Matching be expanded to include other Form 1099 or Form W2 payment instruments?
Plans for program expansion are actively being pursued. At the present time, payers of Form W-2 income, wishing to validate employee SSNs, should contact the Social Security Administration (SSA) for information on their SSNVS (Social Security Number Verification Service).
21. How may I find out more about the TIN Matching Program?
Check out these useful TIN Matching resources:
22. What should I do to secure an accurate TIN from my Payee?
You can use Form W-9 to gather the updated TIN and Name information from the payees.
It would be useful to refer to the Instructions for Form SS-4, lines 1 and 2 to determine what name may have been submitted to the IRS.
Ultimately, the name submitted for TIN Matching should be the legal name from line 1 or the trade name from line 2 if a return using this name has already been filed and accepted.
The legal name of the entity will create the best potential to match because the IRS maintains prior name controls for an EIN even after a name change has been made.
For more information about the IRS TIN Matching program, check out this resource from IRS.
Tax1099 TIN Matching Service FAQs
23. How many TIN checks are possible daily with Tax1099 TIN Matching Service?
Tax1099 helps you to validate 5 Million+ TIN Checks every day with the IRS. Get Started Now
24) What are the possible use cases supported by Tax1099 TIN Match Service?
Tax1099 TIN Match Use Cases:
- Tax1099 TIN Match feature is flexible for your use case.
- Account Opening for neo banks & banking industry
- Customer Onboarding for lending/financial services
- Merchant Onboarding for retail/eCommerce industry
- Gig Economy – 1099 Vendor onboarding compliance
- KYC/AML Compliance to reduce false positives
- Supports many more use cases.
25. How To Verify A TIN Number With Tax1099 TIN Lookup Service?
Follow the steps below to check the TIN Match status for your entity:
- Login to your Tax1099 account. If you haven’t registered yet, Sign up now for free
- Enter the Business Name, TIN Number, and submit the TIN verification data.
- View the TIN Match report and check the TIN Number search status.
- For Bulk TIN Lookup, download the IRS TIN Search template and upload with data as necessary.
- Explore the available Tax1099 integrations to export your TIN search data to Tax1099 easily.