Earlier this year, one of our clients received a dreaded notice from the IRS:
“66 of your 320 filed 1099s included invalid TINs. Backup withholding must begin immediately.”
This kind of letter isn’t just annoying – it’s serious. It triggers extra paperwork, potential penalties, and required 24% withholding on all future payments to those flagged vendors.
What Happened
Like many small businesses, this client had done their best to collect W-9s and file timely 1099s. But they had no way to know if the TINs (Taxpayer Identification Numbers) they collected were valid… until the IRS flagged them after filing.
The result?
- 66 mismatches
- Multiple vendors put on hold
- A scramble to get corrected info
- An immediate risk of noncompliance and penalty exposure
What Changed
To help solve the problem, and prevent it from happening again, we implemented our new TIN Verification service.
As part of our Full Service 1099 Compliance package, we now run every vendor through the IRS’s TIN Matching system before year-end. This allows us to:
- Catch invalid or mismatched TINs early
- Notify you of vendors needing an updated W-9
- Avoid IRS B-Notices and backup withholding requirements
In this client’s case, we’ve already resolved 58 of the 66 mismatches – and we’re on track to clean up the rest well before the next filing deadline.
Why It Matters
TIN Verification may sound like a small step, but it can make a big difference:
- Avoid IRS Notices that create stress and confusion
- Prevent 24% backup withholding that strains vendor relationships
- Protect your business from potential fines and compliance issues
- Stay ahead of year-end chaos with clean vendor data
Included in all 1099 Monitoring Services
We’ve now rolled out this TIN verification process as a standard feature in all of our 1099 filing engagements.
If you’re not yet enrolled, now is the time to start. We’ll review your vendor list, check TIN accuracy, and guide you through a smooth and compliant year-end filing process.