TinMatch

What is TIN Matching?

TIN Matching is a service offered by the Internal Revenue Service (IRS) to help payers verify the Taxpayer Identification Number (TIN) and name combination of their payees against IRS records. The purpose of this service is to prevent TIN-related errors on information returns.

How Does Tin Matching Work?

The process of TIN matching can we broken down into 4 steps.

1. How it Works: Authorized payers or their authorized agents can submit up to 25 TIN and name combinations (for immediate matching) or up to 100,000 combinations (for bulk matching) to the IRS for validation.
2. Results: The IRS will check the submitted combinations against its database. If there's a match, it means the TIN and name combination on file matches IRS records. If there's a mismatch, it indicates a discrepancy that needs to be resolved.
3. Benefits: By using TIN Matching, payers can proactively reduce the number of backup withholding notices and potential penalties from the IRS due to mismatches on filed returns.
4. Eligibility: To use the TIN Matching system, one must be an established payer who has filed information returns with the IRS in at least one of the two past tax years.

It's an effective tool for businesses and entities that issue forms like 1099, ACA, W-2 & more to ensure that the information they have on their payees is accurate and consistent with IRS records before filing their returns.

What Happens when an employer gets a TIN Error?

When a TIN (Taxpayer Identification Number) error occurs on a 1099 form, it means there is a discrepancy between the name and TIN combination provided on the form and the information held by the Internal Revenue Service (IRS). This can be due to a variety of reasons, such as a typographical error, a recent name change, or an outdated TIN. When such errors are identified, the IRS may send a notice to the payer, indicating the mismatch. Continuous mismatches can lead to penalties for the payer. It's essential for both the payer and the recipient to ensure that accurate and up-to-date information is provided on the 1099 form to avoid potential issues with the IRS.

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What Happens if TIN does not match IRS Records?

If a TIN doesn't match the Internal Revenue Service (IRS) records, the IRS will likely notify the payer about the discrepancy, typically through a CP2100 or CP2100A notice. This notification serves as a prompt for the payer to take necessary corrective action.

The payer is required to begin backup withholding on any reportable payments due to the payee if the TIN continues to mismatch even after issuing a "B Notice" to the payee. The "B Notice" instructs the payee to correct any information and to provide a properly completed Form W-9, 'Request for Taxpayer Identification Number and Certification', to the payer.

If the payer does not comply with the backup withholding requirement, they may become liable for paying the uncollected amount and potentially incur penalties.

Therefore, it's crucial to ensure that the TINs match IRS records to avoid such complications. If a mismatch is reported, it should be addressed promptly by reaching out to the payee to verify their information or through services like the IRS TIN Matching Program, which can help validate TINs before submitting forms to the IRS.

Is Tin Matching Required to File With the IRS?

While TIN matching is not technically required to file with the IRS, it is highly recommended. TIN matching is a proactive measure that allows payers to verify that the Taxpayer Identification Number (TIN) and name combinations on their information returns match those currently on file with the IRS.

The purpose of this service is to prevent TIN-related errors and mismatches on submitted forms, such as the 1099 forms. Errors or mismatches can result in backup withholding notices and potential penalties from the IRS, as well as additional administrative work to resolve the issues.

By participating in TIN matching before filing, businesses can reduce these potential issues. It's particularly beneficial for those who make reportable payments subject to backup withholding and for large volume filers. However, while the program can be very beneficial, the IRS does not mandate its use; it is an optional tool available to assist filers in reducing errors.