Compliance: Addressing missing, incorrect TINs on a W-9
CUNA compliance staff has received a number of questions in recent weeks regarding Internal Revenue Service (IRS) W-9 forms and taxpayer identification numbers (TINs).
A recent CompBlog entry lists some of those frequently asked questions, along with answers.
The IRS considers a TIN to be “missing” if:
- It is not provided;
- Has more or less than nine numbers; or
- Has an alpha character as one of the nine characters.
The IRS considers a TIN to be “incorrect” if:
- It is in the proper format, but the name/TIN combination does not match; or
- It cannot be found in IRS or Social Security Administration (SSA) files.
After submitting Form 1099 returns, the IRS will send a CP2100 or a CP2011A Notice, and list the incorrect names or TINs on those forms. Credit unions are required to compare the listings with their records.
For missing TINs, if a credit union has not started backup withholding, it must begin immediately and continue until the credit union receives a TIN. Credit unions must make at least three solicitations for the TIN (initial, first annual, second annual) to avoid a penalty for failing to include a TIN on an information return.
For incorrect TINs, credit unions should compare the accounts on the listing with business records. If they agree, an appropriate backup withholding should be sent to the payee. If an account does not agree, this could be due to an error from the IRS or SSA.
In this case, a credit union should correct or update their records, it does not need to contact the IRS telling them it has done so.
The CompBlog post makes a deeper dive into this topic, including answers on annual solicitation requirements, what to do in case of incorrectly reported TINs and more.