If you file information returns like Forms 1099 and the IRS finds incorrect taxpayer identification number (TIN) and name combinations, you may receive a CP2100 or CP2100A notice—often called a “B-Notice.” These notices require quick action to avoid penalties and potential backup withholding. Understanding the IRS CP2100 notice steps is critical for staying compliant.
1. What a CP2100 Notice Means
A CP2100 notice alerts you that one or more payee records in your information return filings didn’t match IRS or Social Security Administration (SSA) records. Common reasons include:
- Typographical errors in names or TINs
- Missing TINs
- Using a nickname instead of the legal name
- Outdated records after a legal name change
2. Steps to Take Immediately
Step 1: Review the Notice and Listed Payees
Check the enclosed listing for the mismatched records. Each entry shows the payee’s name, TIN, and the form type (e.g., 1099-NEC).
Step 2: Compare With Your Records
Verify your internal records against the notice. Sometimes the issue is as simple as a data entry error or an outdated name after marriage or incorporation.
Step 3: Send the First B-Notice
If the mismatch is valid, you must send the payee a First B-Notice within 15 business days of receiving the CP2100 notice. This notice requests that the payee complete a new Form W-9 to correct their information.
Step 4: Begin Backup Withholding (If Required)
If the payee fails to provide a correct TIN, you may need to start backup withholding at the IRS-mandated rate (currently 24%) on future payments.
Step 5: Keep Documentation
Maintain a record of the notice, your correspondence with the payee, and any updates to your records. This can protect you in the event of an IRS audit.
3. Avoiding Future CP2100 Notices
- Use the I099FIRE TIN Matching Service before filing returns
- Collect and verify Form W-9 before making the first payment to a vendor or contractor
- Keep your vendor records updated after legal name changes
- Automate validation using compliance software
Bottom Line
A CP2100 notice is a warning sign that something in your reporting needs attention—fast. By following the IRS CP2100 notice steps, correcting the errors, and implementing better TIN verification practices, you can reduce the risk of penalties and streamline future filings. Partnering with a trusted provider like 1099FIRE can help you stay ahead of compliance challenges.