Understanding IRS CP2100 and CP2100A Notices: What They Mean and How to Respond

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Receiving an IRS notice may sound daunting, but in reality, it’s just a minor setback that can be quickly resolved with the right steps.

If you’ve received a CP2100 or CP2100A notice from the IRS, there’s no need to panic. These notices indicate that the payee name and taxpayer identification number (TIN) reported on one or more information returns, such as Form 1099, are missing or do not match IRS records.

The key is understanding what these notices are really about and how to take the right steps to fix the issue before it snowballs into something bigger like backup withholding or IRS penalties.

What is a CP2100 or CP2100A Notice?

CP2100 and CP2100A notices are issued by the IRS when one or more information returns you filed contain missing, incorrect, or mismatched TINs.

The key difference between the two notices lies in the number of returns with errors:

• CP2100 is issued when 50 or more returns contain errors.
• CP2100A is issued when fewer than 50 returns have errors.

Both notices contain the same type of information and corrective instructions.

How the IRS delivers these notices

• Large-volume filers (250+ error documents): Receive a CP2100 data file on CD/DVD.
• Mid-size filers (50–249): Receive a paper CP2100 notice.
• Small filers (fewer than 50): Receive a paper CP2100A notice.

The IRS typically sends these notices twice a year—April and October.

What should you do when you receive a CP2100 or CP2100A Notice?

Once you receive the notice, review it carefully. The IRS generally flags two types of issues:

1. If a TIN is missing or incorrect

Start backup withholding right away, if you haven’t already. The IRS expects you to withhold a portion of payments made (typically 24%) to any payee who either failed to provide a TIN or gave an invalid one. To avoid penalties, you must also attempt to collect the correct TIN by making three requests: an initial request, followed by annual follow-up requests if needed.

2. If the name and TIN don’t match IRS records

Compare your records with the notice. If they match, send the payee a “B” Notice, informing them of the mismatch and requesting that they correct their information.

There are two “B” Notices – the First “B” Notice and the Second “B” Notice. 

• You must send the First “B” Notice and a Form W-9 to a payee after you receive the first CP2100 or CP2100A Notice with respect to the account for soliciting a correct Name/TIN combination.
  
• You must send the second “B” Notice to a payee after you receive a second CP2100 or CP2100A Notice within a 3 calendar year period. The text of the Second “B” Notice is different from that of the First “B” Notice. The Second “B” Notice tells the payee to contact the IRS or SSA to obtain the correct Name/TIN combination. The mailing of the second notice should not include a Form W-9.

If your records don’t match the IRS notice, it may be due to a recent update, a filing error, or a processing error. In that case, you only need to update your records—there’s no need to notify the IRS directly.

When do I send a “B” Notice to a payee? 

• You are allowed 15 business days from the date of the CP2100A or CP2100 Notice, or the date you received it (whichever is later), to send a “B” Notice to a payee. 

• For incorrect TINs, you only have to send the “B” Notice to a payee whose Name/TIN combination and account number on your records agree with the combination that the IRS identified as incorrect.

What is backup withholding? 

• Persons (payers) making certain payments to payees must withhold and pay to the IRS a specified percentage (typically 24%) of those payments under certain conditions.

• So basically, if a company regularly hires a 1099 worker, and the company receives notice that the TIN is incorrect/missing, they can (under the conditions listed) start backup withholding.

• If they do not regularly hire the contractor and do not hire them again, the payer is NOT responsible for paying the backup withholding, but they should notify the IRS that they have performed their duties to get the correct TIN.

Payments subject to backup withholding

Payments that may be subject to backup withholding include:

• Interest and dividends
• Rents and royalties
• Commissions
• Nonemployee compensation
• Broker and barter exchange proceeds
• Gross proceeds paid to attorneys
• Certain fishing boat operator payments

What should I do if a payee refuses or neglects to provide a TIN?

Begin backup withholding immediately on any reportable payments and complete the required annual solicitation (request) for the TIN.

Resolving CP2100 and CP2100A Notices with TaxBandits

Dealing with CP2100 and CP2100A notices doesn’t have to be overwhelming. With the right approach, you can quickly resolve any mismatched TINs and avoid penalties. 

TaxBandits streamlines the entire resolution process by automating critical steps such as backup withholding, generating “B” Notices, and managing TIN corrections efficiently. 

Don’t let IRS notices cause unnecessary stress. 

With TaxBandits, you can stay on top of your compliance obligations while focusing on what truly matters—growing your business.