What these documents are
Program Manager Technical Advice and Chief Counsel Advice are written legal advice from the Office of Chief Counsel to IRS operating divisions, released under IRC 6110 with identifying details removed. Each carries the warning that it "may not be used or cited as precedent." Their value to a payer is different: they show the position the IRS will take, in the words its own lawyers used, and they are often adopted into the manual. PMTA 2023-03 is cited by name in the employment tax examiner's manual (IRM 4.23.8.14.1, Apr. 17, 2024) as the reason a payor "must backup withhold during the period during which the TIN has not been furnished in the manner required, regardless of whether the payor receives and complies with a CP2100." The intentional disregard memo is older, but the regulation it applies is unchanged apart from renumbering.
PMTA 2023-03: the CP2100 does not erase prior liability
The memo, dated June 29, 2023, from Procedure and Administration to Employment Tax Policy, poses two scenarios. In the first, "The payor made a reportable payment to the payee, but the payee did not furnish its Taxpayer Identification Number (TIN) to the payor. The payor did not backup withhold. The IRS sent the payor a CP2100/2100A notice stating that the payor needs to secure the payee's TIN by having the payee send a Form W-9 to the payor. The payor followed the compliance instructions." In the second, the payee had furnished a TIN on a W-9, the IRS notified the payor it was incorrect, and the payor "followed the compliance instructions in the CP2100/2100A notice by timely sending a blank Form W-9 to the payee and informing the payee that backup withholding will begin if the payee does not send back an executed Form W-9." The question: "does the payor's compliance with the instructions stated in the notice imply that the payor does not have backup withholding liability under section 3406(a)(1)(A) with respect to a reportable payment made before compliance?"
"Under section 3406(a)(1)(A), the payor must backup withhold during the period during which the TIN has not been furnished in the manner required, regardless of whether the payor receives and complies with a CP2100 or CP2100A notice" (PMTA 2023-03, June 29, 2023, Conclusion).
The reasoning turns on the statute's structure. "The disjunctive 'or' in the rule indicates that the condition under section 3406(a)(1)(A) for imposing backup withholding is independent of the condition under section 3406(a)(1)(B)." For (A), "backup withholding is required during the period during which the TIN has not been furnished in the manner required"; for (B), "beginning after the close of the 30th day after the day on which the payor received the notification ... and ... ending before the payee furnishes another TIN in the manner required." A CP2100 "provides the notice described in section 3406(a)(1)(B)," and complying with it "may lead to the condition stated in section 3406(e)(2)(B) (the payee furnishing another TIN in the manner required) being met ... in which case backup withholding under section 3406(a)(1)(B) can cease." But the notice "is not relevant to the imposition backup withholding obligations under section 3406(a)(1)(A)."
"compliance with the CP2100 or CP2100A has no bearing on the backup withholding liability under section 3406(a)(1)(B) that existed for the period before compliance," and "complying with all the instructions stated in a CP2100 or CP2100A notice does not affect backup withholding liability that was preexisting under section 3406(a)(1)(A) before the notice was sent" (PMTA 2023-03).
Applied to the scenarios: in the first, "at the time of the reportable payment, the payee had not furnished any TIN to the payor. The condition for imposing backup withholding with respect to that payee under section 3406(a)(1)(A) is met. Thus, the payor was obligated to backup withhold. If the payee thereafter furnishes a Form W-9 to the payor, then within 30 days of receipt of the Form W-9, the payor should stop backup withholding." In the second, the incorrect-TIN condition "is separate from the backup withholding obligation under section 3406(a)(1)(A). The CP2100 or CP2100A notice does not affect the preexisting backup withholding liability under section 3406(a)(1)(A)." The memo quotes the regulation's general rule: "A payor must continue to withhold under section 3406 until no condition for imposing backup withholding exists with respect to the payee" (Treas. Reg. 31.3406(e)-1(a)).
The two conditions, kept separate
PMTA 2023-03, Scenarios 1 and 2; Treas. Reg. 31.3406(e)-1(a), (b); 31.3406(d)-5(e), (g)(3).
The practical consequence is the one the examination guide describes: an examiner computes withholding on a missing-TIN payee from the first payment, not from the 30th business day after a CP2100, and a payer's defence that it "followed the notice" answers only the incorrect-TIN side. The TIGTA figures on the inspector general page are built on the same reading. What does help on the missing-TIN side is Forms 4669 and 4670 for payees who reported the income, and the regulation's 30-day stop once a certified TIN arrives.
CCA 200941012: intentional disregard applied
The memo advised whether the IRS "may determine an intentional disregard penalty under Section 6721(e) against Company A for failing to timely file information returns for Year 5." Company A was one of the largest Form 1099 filers in the country, executing trades for financial institutions, with filings that grew from N1 to N3 forms over five years. The facts Counsel recited: for Years 1 and 2 the returns were filed late and under both Company A's and an acquired company's names; the IRS sent 972CG notices, Company A explained the lateness by computer problems "at both Company A and the Service's FIRE unit" and promised that "the proper resource and system commitments" had been made, and "the Service waived the penalties for both years." Years 3 and 4 were late again. For Year 5, FIRE staff emailed in May and August and the IRS wrote in July asking when the returns would be transmitted; "Company A ignored these contacts and filed its information returns in October of Year 6." After being told intentional disregard was under consideration, Company A filed Year 6 on time despite a three-fold volume increase.
Counsel's conclusion: "Yes, the Service may determine the intentional disregard penalty under Section 6721(e) against Company A because the facts suggest it knowingly or willfully failed to timely file information returns with the Service for Year 5." The standard: "Whether a taxpayer knowingly or willfully fails to timely file an information return is 'determined on the basis of all the facts and circumstances in the particular case.'"
The four factors, as Counsel weighed them
The intentional disregard factors, as the regulation lists them and Counsel applied them: "(i) whether the failure to file timely is part of a pattern of conduct of repeatedly failing to file timely; (ii) whether a correction was promptly made upon discovery of the failure; (iii) whether the taxpayer corrects the failure to file within 30 days of a written request from the Service to file; (iv) whether the failure to timely file penalty is less than the cost of timely filing" (CCA 200941012, citing Treas. Reg. 301.6721-1(f)(3), now (g)(3)).
Pattern. "Since Year 1, Company A has exhibited a pattern of repeatedly failing to timely file its information returns. The Service waived proposed penalties for Years 1 and 2 after Company A showed that it had reasonable cause ... and assured the Service that remedial measures were taken to ensure future compliance. These remedial measures were apparently not taken or were inadequate as evidenced by Company A's subsequent late filings." A granted waiver becomes evidence against the filer when the promised fix does not happen.
Prompt correction and the 30-day request. The IRS's emails and letter were ignored for months: the returns came "more than 5 months after the May 2nd e-mail and 3 months after the July 7th letter." Informal contacts from the FIRE unit counted as written requests.
Cost of compliance versus penalty. "The fact that Company A was able to timely file after experiencing such a large increase in volume strongly suggests that Company A could have timely filed the Forms 1099 for Year 5 and the prior years had it dedicated the necessary resources," and "its repeated late filing due to insufficient resources appears to be attributable to a financial decision." Then the detail that matters most to payers who prioritise recipient copies: "Company A has stated that it provided its clients with timely Forms 1099 every year even though it was unable to timely report to the Service. This suggests that the information was available and that Company A was able to print and timely mail millions of Forms 1099. These actions strongly suggest that Company A could have but chose not to expend the resources necessary to timely file with the Service." Counsel inferred a weighing of costs: "it can be inferred that Company A believed that the cost of losing customers due to late mailings of Forms 1099 was considered greater than the cost of ensuring that its customers timely received their Forms 1099."
The penalty consequence is in the regulation the memo applied, now Treas. Reg. 301.6721-1(g)(4): the per-return caps and the annual maximum "will not apply," and the penalty is "$500 or, if greater, the statutory percentage," which for most 1099s is "10 percent of the aggregate dollar amount of the items required to be reported correctly" (the memo's 5 percent figure reflects the pre-2011 statute). The intentional disregard guide covers the manual's version and the current amounts.
How to use them
- Stop treating the CP2100 as the start of exposure for missing TINs. Under PMTA 2023-03 and the regulation, the exposure began with the first payment made without a TIN. The response to a Letter 6112 or an examination should address those payments on their own terms, through Forms 4669 and 4670 and the W-9 dates, not by pointing to the B-Notice.
- Keep the two conditions apart in your records. A payee with no TIN and a payee with a notified incorrect TIN have different start dates and different stopping rules; a solicitation log that records which condition applied, and when it ended, is what the examiner reconstructs.
- Treat a granted waiver as a promise. Counsel used Company A's own reasonable-cause letters, and the waivers they won, as evidence of a pattern when the next year was late. A response that says the problem is fixed should be true.
- Answer the IRS's informal contacts. Emails from the e-help desk and processing letters were treated as written requests under the 30-day factor. Silence for months is itself a fact.
- Do not let recipient copies go out while the IRS file waits. Timely payee statements with late IRS filing was read as proof that the data existed and the filer chose where to spend. File both.
Questions people ask
Can we cite PMTA 2023-03 in a dispute with the IRS?
You can quote it as the IRS's stated position, which the manual has adopted; it has no precedential force for or against you. It is more useful for understanding what the examiner will compute than for arguing against it.
Does complying with a CP2100 protect us from anything?
Yes: it ends the incorrect-TIN condition once a certified TIN arrives, it satisfies the solicitation requirement that reasonable cause for the penalty depends on (Treas. Reg. 301.6724-1(f)(3)), and it is the record the examiner tests. It does not reach back to payments made before the notice, and it does not touch a missing-TIN obligation at all.
Our 1099s were late one year because of a system migration. Is that intentional disregard?
One late year with a prompt correction and no history is the opposite of the pattern Counsel found. The factors are cumulative: repetition, ignoring requests, correcting late, and evidence that filing was a cost decision. The regulation's reasonable-cause route in 301.6724-1 is where a single explicable failure belongs.