Missing-TIN exposure calculator

Enter the payments you made to payees with no TIN on file and see what the IRS's backup withholding unit would compute: the 24% tax, the failure-to-file and failure-to-pay penalties, interest, and how much of it First Time Abate removes if you sign the Form 945 instead of letting the IRS assess.

Basis IRM 4.19.26 (Oct. 24, 2022): computed backup withholding at 4.19.26.7.1.1, penalty stack at 4.19.26.11.1, First Time Abate at 4.19.26.11.2.4; IRC 3406, 6651, 6020(b)Privacy runs in your browser; nothing you enter is sent or stored

Total payments to payees with no TIN on file

Sum of the amounts on every 1099 you filed (or should file) with a blank TIN, for one calendar year.

Calendar year of the payments

24% from 2018; 28% for 2003 to 2017.

Months since the Form 945 was due

Form 945 is due January 31 of the following year. Leave the default if you are not sure; the failure-to-file penalty maxes out at five months anyway.

Annual interest rate to assume

IRS underpayment rate for corporations, set quarterly. 7% is a placeholder; check the current rate.

No Form 945 penalties in the prior three years and all returns filed

The First Time Abate conditions.

An estimate of the numbers in a Letter 6112 case, not a substitute for the IRS's List of Payees. Interest is approximated as simple interest on the tax; the IRS compounds daily.

How the estimate is built

Under IRM 4.19.26 the Campus Backup Withholding unit computes the liability on a payee with no TIN as the reportable payments times the backup withholding rate, 24% since January 1, 2018 (IRM 4.19.26.7.1.1, 4.19.26.2.2). A missing TIN requires withholding at the time of payment "regardless of any threshold amount," and "a continuing business relationship is not a factor" (IRM 4.19.26.2.3, 4.19.26.10.7.14), so every dollar counts.

On a default assessment the unit adds the failure-to-file penalty, 5% per month to a maximum of 25% (the IRM notes that "Generally, CBWH cases are all more than 5 months delinquent so the maximum penalty of 25% applies"), and the failure-to-pay penalty, 0.5% per month to 25%, with the failure-to-file amount reduced by the failure-to-pay amount for months both run (IRM 4.19.26.11.1.1 to 11.1.4, 4.19.26.12.3.2.4). Interest is statutory and "cannot be reduced or abated by CBWH employees" (IRM 4.19.26.11.5).

The two columns show the difference between signing and returning the Form 945 the examiner prepares, which keeps First Time Abate available for the penalties, and letting the IRS assess under IRC 6020(b), where "FTA is not available" (IRM 4.19.26.11.2.4). The tax and the interest are the same either way.

The only thing that removes the tax itself is proof the TIN was on file when the payment was made, or a Form 4669 from a payee who paid the tax on the income (which abates the tax but not the penalties or interest). See the Form 945 non-filer program.

What is not in the estimate

The program's dollar tolerance below which a case is closed. It exists (IRM 4.19.26.6.2) but is redacted from the public manual.
Failure-to-deposit penalties, which apply when withholding was actually taken and not deposited (Workstream 2). This calculator is for the missing-TIN case.
Information return penalties under IRC 6721 for the same blank TINs, which come separately on Notice 972CG from a different campus. Use the 972CG estimator for those.