What's different here
- The W-9 is collected at account opening, under CIP. Customer Identification Program rules already require name, date of birth, address and TIN, so the TIN is on file; the failure mode is a TIN that was collected but never certified or never matched, or a name that changed without the record following.
- C-Notices apply. The IRS notifies payers of interest and dividends when a payee has under-reported, requiring backup withholding on those accounts until the IRS says stop. Vendor-only payers never see these; institutions need a process for them.
- The second-annual-solicitation rule for missing TINs interacts with account-opening rules: for accounts opened before 1984 and certain other cases the solicitation history is different, and the institution's legacy records are the evidence.
- Backup withholding is on interest and dividends, so it is applied by the core system at payment, not by AP, and reconciled on Form 945 with deposits that can run daily. A missed withholding flag on a high-balance account is a large liability quickly.
- 1099-K obligations apply to institutions acting as payment settlement entities, at the $20,000 / 200-transaction threshold, on top of the customer-account forms.
- FATCA and chapter 3 reach every non-U.S. account holder: W-8 collection, 1042-S reporting, and Form 8966 for reportable accounts. The W-9/W-8 decision at onboarding drives both regimes.
What a mature program looks like
- TIN matching of every new account pair within days of opening, with a code-3 workflow that reaches the customer before the first interest posting.
- Annual bulk re-match of the account base ahead of 1099 season, with corrections applied before the file is generated.
- A CP2100 process with an owner, a business-day calendar, and a system flag for B-Notice status; a C-Notice process alongside it.
- OFAC screening at onboarding and on list updates (already a BSA requirement), sharing the same customer record as the TIN result.
- A solicitation log the compliance team can produce per customer, going back at least three years, for the inevitable 972CG.