When you are notified by the IRS that a payee provided an incorrect name and taxpayer identification number (TIN) combination, you are to start backup withholding (28%) and pass along any “B Notices” you receive.
The interrim procedures require the payee to validate a Social Security number (SSN) by contacting the local Social Security Administration (SSA) office requesting an SSN printout, which they must give you a copy of. Once you receive the printout you can stop backup withholding.
There are 2 “B Notices”. These are notices you receive with your mismatch notification that you are to forward to the payee with the TIN-Name mismatch. The first B-Notice you receive should be given to the payee with a Form W9, Request for Taxpayer Identification Number and Certificate.
NOTE: Following this link takes you do a pdf document at the IRS.gov website. Pdfs can be viewed and printed using Adobe Acrobat Reader, which can be downloaded for free from Adobe.com. Art and Business Consulting LLC (ABC LLC) and its owners, employees and affliates are NOT affiliated with IRS.gov or Adobe.com. When you visit their sites you will be subject to their policies and ABC LLC does not know what thier policies are.
To continue. When you receive the first Notice of a TIN/Name mismatch from the IRS you should deliver the B Notice to the payee with a blank Form W-9 and begin backup withholding of 28%. Presumably if they return the W-9 with different TIN/Name information you would make the change and stop backup withholding. If they don’t then eventually you will get the second B notice, but while you are waiting for it you would continue backup withholding in the absence of any action by the payee.
When you receive a second notice of TIN/Name mismatch you should deliver the second B notice to the payee (do NOT give them a w-9); the second notice tells the payee they must go to the IRS or SSA to get the proper Name-TIN combination. The payee must now certify the TIN-Name Combination with the SSN printout. In the past the SSA would send a form SSA-7028, but the Form is now obsolete hence the interrim procedure noted above.
In general you should only receive 2 of these notices in a 3 year period per payee.
As always, small business services and taxation are our business. If you need help Please give Art & Business Consulting a call. We would love to engage you as a client.
The usual disclaimers: Although ABC has made every effort to insure the accuracy of Taxes, Tips and Tools, misinformation, disinformation, changes, mistakes, typos and hackers happen, therefore Art & Business Consulting LLC takes no responsibility for any action taken or results based on the information supplied here in. The content of this blog generally applies to business and individual taxation in the United States of America. Internal Revenue Service Circular 230 Disclosure: As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement address herein. Art & Business Consulting LLC currently does not have a certified public accountant, human resource specialist, financial plan advisor or an attorney on staff; this information is purely for educational purposes and not to be construed as legal or financial advice. Art & Business Consulting LLC and its employees, members and associates are not engage to practice law; you always should discuss legal matters with your attorney before talking to anyone else.