With the tax season here, the Internal Revenue Service (IRS) and different states require businesses to verify their payee’s Taxpayer Identification Number (TIN). This requirement is necessary to help ensure that the payee’s name, address, and TIN are correct. In this blog, we’ll share a comprehensive guide on verifying TINs electronically with the help of the IRS and Tax1099’s secure TIN verification service.
What’s the one thing that strikes fear into the heart of every business owner? A visit from the IRS! And while there are multiple things the IRS can come knocking on your door for, one is regarding Taxpayer Identification Number (TIN). But don’t fret because this guide will help ensure all your TINs are in order without running and hiding from the IRS!
Understanding What Is TIN?
A taxpayer Identification Number (TIN) is a nine-digit number issued by the IRS to taxpayers. It identifies and tracks individual business entities and individuals for tax purposes. TINs are also known as Employer Identification Numbers (EIN) for businesses, Social Security Numbers (SSNs) for individuals, or Individual Taxpayer Identification Numbers (ITINs). The purpose of a TIN is to help the IRS track and properly assess taxes on individuals and businesses.
Who Needs a Taxpayer Identification Number (TIN)?
All individuals, companies, organizations, trustees, or others who must report income or pay taxes must obtain a TIN. It’s important to note that most US citizens will already have a TIN assigned by the Social Security Administration (SSA). This number is typically used for all tax filings. Non-US citizens may need to apply for an ITIN if they do not have another form of identification, such as a Permanent Resident Card (Green Card) or valid visa, depending on their circumstances.
Why does a Business Need To Verify The TIN?
Businesses need to verify a TIN to accurately report all income and wages earned by their employees or contractors. By verifying a TIN, businesses can be sure that the information is correct before filing taxes. In addition, when dealing with vendors or other businesses, it’s important to check their TIN to ensure you are working with legally authorized entities.
In short, verifying taxpayer identification numbers is an important task for any business. It helps them comply with tax laws and regulations while ensuring accurate income and wage reporting.
What Are The Penalties For Wrong TIN?
Companies that fail to validate TINs can face hefty financial penalties. According to the IRS, a company that fails to match the information on an employee’s W-2 form with their TIN could be liable for up to $50 per incorrect form if it is not corrected within 30 days of notice from the IRS. That goes up to $280 per form if the company is more than 30 days late. They could also be subject to fines and interest payments for failure to pay employment taxes.
IRS sends CP2100, or CP2100A notices to employers about TIN mismatches. This notice informs the employer of discrepancies between what was reported on the W-2 form and the employee’s TIN as stored in the IRS records. Employers must take prompt action and inform employees if they receive such notice from the IRS.
The bottom line is that employers must verify the accuracy of their employees’ TINs to avoid hefty penalties.
How To Verify TIN Electronically?
Taxpayers can use two tools to ensure their payee data is accurate before filing Form(s) 1099 with the IRS and Form(s) W-2 with the SSA. One of them is the Taxpayer Identification Number (TIN) Matching Program, provided by the IRS, while the other is The Social Security Number Verification Service (SSNVS), which comes from the SSA. This will prevent any hefty penalties from being received from either organization.
IRS also encourages users to use various third-party vendors that provide TIN matching services. These vendors offer the same accuracy as the IRS’s TIN Matching Program and SSNVS. Employers must ensure that they are working with a reputable vendor and know any fees associated with each service.
How Tax1099 Can Help You With TIN Verification And Why It Is The Right Choice For You?
While IRS offers the TIN Matching Program, verifying a single form can take up to half an hour, and dealing with multiple forms can take even days to complete. To help you save time and money, Tax1099, an IRS-Authorized e-file provider, offers fast, reliable, and 100% accurate TIN matching services that can match bulk TINs and give results in just seconds!
Here are the top reasons why Tax1099 is the best choice for you:
- Tax1099 is an IRS-authorized e-file provider, so you can trust us with your data.
- We offer TIN verification services that are fast and reliable, saving you time and money.
- Tax1099’s TIN Matching API is there to help you in the bulk TIN matching process, making it easier and faster.
- Our security measures like 256-bit encryption, 2-factor authentication, and more ensure maximum security for your data.
These are just some of the many benefits of using Tax1099 for your TIN matching needs. With our services, you can quickly and easily match bulk TINs, saving time and money. And not only do we provide a secure platform, but you can be sure that your data is safe with us.
So why wait? Start using Tax1099 today to make the TIN matching process easier and more efficient!