IRS TIN Matching – TaxBandits’ New Feature for the 2023 Tax Year

Learn more about the importance of TIN Matching and how it can streamline your 1099 E-filing process!

Stephanie Glanville | December 1, 2023 | Read time: 6 minute(s) | Form 1099 Series | No Comments

When it comes to filing your year-end tax forms with the IRS and SSA, specifically the IRS 1099 series, it can be a complicated process. Unlike your employees who are on your payroll and always available to you, obtaining tax information from the vendors and independent contractors that you do business with isn’t as straightforward.

The team at TaxBandits understands this, and that’s why we design features to simplify your filing process and eliminate your efforts and margin for errors.

Just in time for your year-end 2023 1099 filing, we are introducing our enhanced TIN Matching feature! Here’s an overview of this feature and how it can help you save time this tax season!

What is TIN Matching and Why is it Important?

When you enter into a business relationship with another business (vendor) or individual (independent contractor), you will need certain tax information in order to accurately report all the future payments you make to them.

The most important piece of information that you will collect from them is their Taxpayer Identification Number (TIN). Depending on whether they are a business or an individual, this will be their SSN or EIN respectively.

The process of TIN Matching allows you to verify that your 1099 recipients (payees) have provided you with an accurate TIN, and the best part is that TaxBandits handles this process for you!

Once you have subscribed to TIN Matching for a particular business that you manage, TaxBandits will perform TIN Matching on all the eligible recipients of this business!

Additional Benefits of TIN Matching

You may be wondering why a recipient provides an inaccurate TIN or fails to provide one at all…isn’t that a problem between them and the IRS? Well, the answer to this is that yes, this will be an issue between the recipient and the IRS, but since you are filing the forms and making payments to them, your business will be affected as well. Here’s how your business could be affected.

When filing their 1099: If the recipient doesn’t provide a TIN the first time you send them a request (Form W-9), you are required to send another request before filing their year-end 1099. If you don’t receive a TIN in response to the second request, you will need to indicate this on the Form 1099. There is a box in the area where you enter the payer (recipient) information, ‘2nd TIN Not.’ You can check this to indicate that you have met the requirements for requesting the TIN information.
Backup Withholding: If your recipient fails to provide an accurate TIN, or any TIN at all. They may become subject to backup withholding from the IRS. If this is the case, your business will receive a CP2100 or CP2100A Notice from the IRS. This will provide you with instructions for the backup withholding process. You will typically be required to withhold 24 percent of all future payments made to this recipient.

You will be able to better avoid both of these situations with the help of TIN Matching. Once TIN Matching is performed, you will be notified if the TIN provided does not match IRS records. This will give you time to send a second notice to your recipient ahead of the 1099 filing deadlines. It will also prevent you from needing to figure out and implement backup withholding rules.

A Streamlined 1099 E-filing Process from TaxBandits!

TaxBandits offers a complete solution for the 1099 e-filing process – from beginning to end. Your business can start the process of collecting accurate 1099 information by taking advantage of the W-9 Manager!

This allows you to request W-9 Forms from your new vendors and recipients online. They can then complete and e-sign the request and submit it for your approval and records. Plus, TaxBandits allows you to track requests from your Dashboard and store all of this information securely until it’s time to file 1099s!

With TaxBandits’ TIN Matching subscription, we verify the accuracy of your TIN information, so that you can resolve any issues before transmitting 1099s to the IRS. Allowing you to avoid the need to file a correction for this recipient in the future!

Ready to file 1099 online? Great news! TaxBandits is now accepting 1099 forms for 2023. You can begin the filing process as soon as you have all of your year-end filing information available. In addition to TIN Matching, you can speed up the process with bulk upload options, and integrations with Quickbooks, Xero, ZohoBooks, FreshBooks, and Sage Intacct!