IRS CP2100 Notices
Each year the IRS issues CP2100 Notices for prior year information returns that contained missing, incorrect and/or currently not issued taxpayer identification numbers.  For instance, the 1992 CP2100 Notice was issued in October 1993 and the 972CG Notice of Proposed Assessment that was based on these mismatches was issued in December 1994.  Upon receipt of the CP2100, the IRS procedure requires each agency/recipient to compare their records with the information furnished by the IRS.  There are two separate procedures that must be followed depending on whether the CP2100 listing agrees or disagrees with your records.

For account information that does not agree to your records, check to see if you gave the correct information on your return, if you changed the information after you filed, or if the IRS changed the information when processing the return.  In these instances, you do not have to respond to the IRS, but you need to do the following:

  1. If you did not put the correct information on the return, correct your records and include that information on any future information returns that you file.  Do not send a B Notice to the payee.
  2. If your information changed after you filed your return, be sure to include that information on any future information returns you file. Do not send a B Notice to the payee.
  3. If the IRS changed your information, note your records and take no further action.
For account information that agrees with your records, you must determine whether this is the first or second time within three calendar years that the IRS has notified you the TIN is incorrect.  You must have procedures in place at your agency that allow you to determine whether this is the first or second notification since the procedure that you are required to follow is different for each notification.
  1. Send the first B Notice, a copy of Form W-9, and an optional reply envelope to the vendor within 15 business days from the date of the CP2100 notice or the date you received it (whichever is later).  Date the B Notice no later than 30 business days from the date of the CP2100 notice or the date you received it.  The outer envelope must be clearly marked IMPORTANT TAX INFORMATION ENCLOSED or IMPORTANT TAX RETURN DOCUMENT ENCLOSED.
  2. Allow the payee 30 calendar days to provide you with a newly signed Form W-9.  Keep this W-9 for your records. Please note that once the IRS has informed you that the TIN of a vendor does not match, a telephone call is not sufficient documentation that you have followed procedure.
  3. Update your records with the corrected information received from the vendor and include it on any future information returns you file.
  4. Begin backup withholding on payments made to vendors who do not respond within 30 business days from the date of the CP2100.
  1. Send the second B Notice and an optional reply envelope to the vendor within 15 business days from the date of the CP2100 or the date you received it, whichever is later.  Date the B notice no later than 30 business days from the date of the CP2100 notice or the date you received it.  The outer envelope must be clearly marked IMPORTANT TAX INFORMATION ENCLOSED or IMPORTANT TAX RETURN DOCUMENT ENCLOSED.  Do not send a Form W-9.
  2. The vendor must contact the Social Security Administration (SSA) to have a social security number validated or the Internal Revenue Service (IRS) to validate an employer identification number (EIN).
  3. Allow 30 business days from the date of your request to receive either SSA Form 7028, Notice to Third Party of Social Security Assignment from the SSA or a copy of IRS Letter 147C from the vendor.
  4. Begin backup withholding on payments made to payees if you do not receive SSA Form 7028, or letter 147C within 30 business days.  You must continue to backup withhold until you receive either validation.
See the flowchart below for the 1099 Backup Withholding Process.

Also refer to the following procedures:

Procedure 11:  Comparing your CP2100 Report to the VRS Screen
Procedure 12:  Sending and Receiving First B Notices
Procedure 13:  Sending and Receiving Second B Notices
Procedure 14:  Requesting OSC to Make Changes to Trade Vendors
Procedure 15:  Making Name Only Changes to Non-Trade Vendors
Procedure 16:  Making Taxpayer ID Number (TIN) Changes to Non-Trade Vendors
Procedure 17:  Requesting OSC to Start Backup Withholding on Trade Vendors
Procedure 18:  Starting Backup Withholding on Non-Trade Vendors
Procedure 19:  Setting Up a Non-Trade Vendor for Withholding
Procedure 20:  Making the Entries to Record Daily Backup Withholding Payments to the IRS
Procedure 21:  Requesting OSC to Stop Backup Withholding on Trade Vendors
Procedure 22:  Stopping Backup Withholding on Non-Trade Vendors
Procedure 23:  Completing IRS Forms 945 and 945-A
 


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