IRS Matching of 1099s to Individual Returns

Every year, the IRS processes billions of information returns, including Forms 1099, W-2, and 1095. These forms don’t just disappear into the system—they are matched against individual tax returns using powerful data-matching programs. When a mismatch is found, the IRS often issues notices such as CP2000 letters, proposing additional tax due. At 1099FIRE, we help businesses file accurate 1099s through our IRS-approved software and outsourcing services, reducing the risk of mismatches that can cause headaches for both payers and recipients.

How the IRS Matches 1099s

The IRS uses its Information Returns Processing (IRP) system to automatically cross-check:

• Payer-reported data on Forms 1099 (e.g., 1099-NEC, 1099-MISC, 1099-INT, 1099-DIV).
• Recipient-reported data on individual income tax returns (Form 1040).
• Taxpayer Identification Numbers (TINs) provided on W-9 forms.

If the amounts reported on a 1099 don’t line up with what’s shown on the individual’s return, the IRS issues a notice.

Common Causes of Mismatches

• Incorrect TINs – Filing with a wrong or missing SSN/EIN.
• Name mismatches – The IRS checks that the name and TIN pair matches their database.
• Unreported income – Recipients sometimes forget to include income already reported on a 1099.
• Duplicate or incorrect filings – Submitting two 1099s for the same payment, or filing with errors.
• Late corrections – Fixing errors after the IRS has already processed the original form.

IRS Notices That Result from Mismatches

• CP2000 Notice – Sent when reported income doesn’t match an individual return.
• B-Notices – Sent to payers when the IRS finds a name/TIN mismatch, requiring corrected W-9s.
• Penalty Letters – Failure to file correct information returns can result in fines per form.