The two flowcharts, in words
Publication 1281 ends with two one-page flowcharts, one for incorrect name/TIN combinations and one for missing TINs. The tool above walks them question by question; this is the same logic on one screen.
A third notice for the same name/TIN combination and account can be ignored once both B-Notice steps are done; a different combination for the same payee starts over as a first notice.
Missing TINs never get a B-Notice. The letter for a missing TIN is the annual solicitation, due by December 31.
The rules the tool applies
- Mail within 15 business days of the CP2100 date or the date you received it, whichever is later. Date the B-Notice no later than 30 business days after that same date (Part 4).
- Begin backup withholding no later than 30 business days after the notice date (or receipt) for payees who have not responded; you may start as early as the day after you receive the notice. Stop within 30 calendar days of receiving the W-9 or the agency validation (Q19).
- The First B-Notice goes out with a Form W-9 and an optional reply envelope; the Second B-Notice goes out without a W-9, because a W-9 cannot cure a second notice. Either way the outer envelope is marked IMPORTANT TAX INFORMATION ENCLOSED or IMPORTANT TAX RETURN DOCUMENT ENCLOSED, and the TIN may not be solicited by telephone (Q16, Part 4).
- A Second B-Notice is answered with a Social Security card copy that shows a different name/SSN from the notice or was issued within six months before it, Letter 147C for an EIN, Letter 685C for an ITIN or Letter 096C for an ATIN (Part 4).
- If you already sent a B-Notice for the account this calendar year, or for the same tax year, you may disregard the new notice (Q17). A W-9 that comes back with the same information after a first notice is kept on file; do not withhold (Q25).
- Sending the B-Notice on time also counts as the annual solicitation for penalty purposes (Q22). Track every listed account for three years to apply the two-in-three-years rule (Q26).
- Do not file a corrected 1099 for the name or TIN alone; file one only if a dollar amount changes. Do not send the signed W-9 to the IRS (Part 4).
Questions this tool gets asked
The notice lists a vendor we no longer pay. Do we still send the letter?
Yes. Publication 1281 (Q26) says to send it and try to get the correct TIN, and to note the account so the two-in-three-years rule can be applied if you do business again. A B-Notice is not required only when no payments were made and no return is required for the account for a year.
The B-Notice came back undeliverable.
Begin backup withholding on any further payments, look for a better address and re-mail, and keep the returned envelope with the account for three years (Q18).
Does the CP2100 tell us whether it is a first or second notice?
No (Q21). The payer is responsible for tracking that. The solicitation log has columns for it.
Our payee says they applied for a TIN and are waiting.
The 60-day awaiting-TIN exemption applies only to interest, dividends and certain broker payments. Nonemployee compensation and other reportable payments are subject to backup withholding immediately, even while a TIN is pending (Part 4 note).