Backup withholding “B” program

The "B" Backup Withholding Program, under the authority of Treasury Regulation § 31.3406(d)-5 and IRC § 3406(a)(1)(b), provides a CP2100 or CP2100A Notice to payers (a financial institution, business or person) who file certain information returns with incorrect Taxpayer Identification Numbers (TINs) to begin backup withholding.

Taxpayer (payee) information

How do you become subject to "B" backup withholding?

• You don't provide the payer your TIN in the required manner.
• The IRS notifies the payer that the TIN you provided is incorrect.

Will I get notice from the IRS before the backup withholding starts?

No. When you begin to receive payments reportable on Form 1099 or W-2G, you must furnish your TIN in writing to the payer and certify under penalties of perjury that it's correct. In some cases, the payer will give you Form W-9, Request for Taxpayer Identification Number and Certification PDF, or a similar form. If not, the form is available online for you to complete and provide to them.

If the payer doesn't have a correct TIN, or they receive a notice from the IRS that the TIN is incorrect or missing from the Form 1099 they submit, they must begin backup withholding immediately.

How do I stop the backup withholding?

You must provide your correct TIN to the payer.

Payer information

How will you know to begin backup withholding?

The IRS will issue a CP2100 or CP2100A Notice if the payee's TIN is missing or obviously incorrect (not 9 digits or contains something other than a number) or their name and TIN on the information return filed does not match the IRS's records.  IRS issues CP2100 if you file 50 or more information returns that have error. IRS issues a CP2100A Notice if you file less than 50 information returns that have errors. There is no difference in the type of information or instructions in the CP2100 Notice and the CP2100A Notice.

The notice informs you as the payer that you may be responsible to begin backup withholding if you haven't already done so. Most of the time, when a payer makes a reportable payment to a payee who didn’t provide their TIN or provided a TIN that was obviously incorrect, the payer must backup withhold when they make the payment. If you did not backup withhold on the payment and should have, begin backup withholding immediately. The CP2100/2100A Notice is accompanied by a listing of missing and obviously incorrect TINs, and incorrect TINs that don’t match IRS records. Review Publication 1281, Backup Withholding on Missing and Incorrect Name/TINs (including Instructions for Reading Tape cartridges and CD/DVD Formats PDF) for more information.
 
Payers of income reported on Forms 1099 B, DIV, INT, K, MISC, NEC, OID, and/or PATR may be eligible to participate in the TIN Matching program to verify TINs before filing. IRS e-Services provides various electronic and interactive applications. See the IRS Registration Services website to review the online tutorial. You can also download Publication 2108-A, On-Line Taxpayer Identification Number (TIN) Matching Program PDF.

What to do if you receive a CP2100 or CP2100A notice?

Compare the listing(s) with your records.

• For TINs that are missing or are obviously incorrect: Determine if you are already backup withholding on the account. If you are not, begin backup withholding immediately. You must make up to three solicitations for the TIN (initial, first annual, second annual) to avoid a penalty for failing to include a TIN on the Information Return.
• For incorrect TINs that don’t match IRS records: Compare the accounts on the listing with your business records. If they agree, send the appropriate "B" Notice to the taxpayer (payee). If an account does not agree, this could be the result of a recent update, an error in the information you submitted, or an IRS processing error. If this is what happened, the only thing you should do is correct or update your records.

NOTE: Please don’t call or write to the IRS to say you've corrected your records.

Where to call for help

If you have any questions about backup withholding, information reporting, Forms 1099, or the CP2100 or CP2100A Notices and listing(s), you may call the Information Reporting Program Customer Service Section (call site):

Toll-Free Telephone: 866-455-7438

Hours: 8:30 a.m. to 4:30 p.m. Monday through Friday EST