At vendor onboarding, before the first payment
- Collect a signed Form W-9 (U.S. payees) or the correct Form W-8 (foreign payees). Log the request date and the receipt date. Solicitation rules
- Check the TIN format before submitting it anywhere. Format checker
- Run the name/TIN pair through IRS TIN matching. Record the result code and the date. How matching works
- If the result is 2 or 3, go back to the vendor with a specific question (personal name vs. business name; legal name vs. DBA) and get a corrected W-9 before the first payment.
- Screen the legal name, DBA and signatory against OFAC SDN and Consolidated lists, plus SAM and LEIE if you're federally funded or in healthcare. Log the list date and result. Sanctions screening
- If no TIN was furnished and you're paying anyway, set the vendor to backup withholding at 24% from the first payment. Backup withholding
Monthly
- Re-screen the active vendor master against the current OFAC lists (weekly if you're a financial institution).
- Review the backup-withholding vendors: confirm withholding is actually being applied on payments, and deposits are on schedule.
- Follow up on outstanding W-9 requests older than 30 days.
When a CP2100 or CP2100A arrives (spring and fall)
- Day 0: log the notice date and the date received. Run the deadline calculator.
- Compare every listed account to your current records. Do not send a B-Notice for accounts already corrected, or where the error was yours. CP2100 guide
- Determine first vs. second notice for each account (same account listed within the previous three calendar years?).
- By business day 15: mail First B-Notices with a W-9, or Second B-Notices with agency-validation instructions and no W-9. Envelope marked "Important Tax Information Enclosed." Templates
- By business day 30: begin 24% backup withholding on any listed payee who hasn't responded.
- As responses arrive: verify the new pair, update the record, stop withholding on the next payment.
- File the notice, the mailing list, the mailing date and the responses; retain three years.
December
- Sweep every active vendor with no TIN on file and send the first-annual (or second-annual) solicitation by December 31. Log it. This is the step that preserves the penalty waiver. Why
- Re-run TIN matching on every vendor paid a reportable amount this year whose pair hasn't been verified, or whose W-9 changed.
- Reconcile backup withholding withheld vs. deposited in preparation for Form 945.
January
- File Form 945 by January 31 for the prior year's backup withholding.
- File 1099s with the corrected TINs; show backup withholding in box 4.
- Where a pair is still known-bad, file anyway (a late return is penalized on top of an incorrect one) and note it for the expected CP2100.
When a Notice 972CG arrives (12 to 18 months after filing)
- Log the notice date; the response is due in 45 days (60 if outside the U.S.).
- Check the count and tiers against your corrected-return dates. Penalty estimator
- Pull the solicitation log and B-Notice records for every listed payee.
- Write the reasonable-cause statement, attach the exhibits, sign under penalties of perjury, and send before the deadline. 972CG guide · Template
- Agree and pay the items you can't defend, and fix the onboarding gap that caused them.
Records to keep, and for how long
- W-9s and W-8s: while the vendor is active plus four years.
- Solicitation log (date, method, response): four years after the related return's due date.
- TIN match results and sanctions screening results with dates: four years.
- CP2100 notices, B-Notices sent, withholding start/stop dates: at least three years after the first notice, to apply the second-notice rule.
- Forms 945 and deposit records: four years.