Why TIN Matching/SSN Verification Is Critical To Year-end Compliance

There are two types of taxpayer identification critical to year-end reporting.TIN verification for all 1099s and Social Security verification for W-2s.

Mismatched TINs and SSNs are the most common reasons a filing is rejected. This easily corrected issue can require employers to pay the cost of repeated filing efforts and potentially painful fines and penalties.

What Is A TIN?

A TIN is a Taxpayer Identification Number and includes both a Social Security Number and an Employer Identification Number and is used to administer tax laws. A TIN is either issued by the Social Security Administration (SSA) or by the IRS. A Social Security number (SSN) is issued by the SSA, whereas the IRS issues all other TINs.

The Most Common Taxpayer Identification Numbers

  • Social Security Number “SSN
  • Employer Identification Number “EIN
  • Individual Taxpayer Identification Number “ITIN

How Does TIN Matching Work?

Like many government services, this process may be challenging to follow, so the best practice is to utilize a service that utilizes the information directly from your accounting software, makes the matching request, and provides the results directly to you.

A TIN matching service like Aatrix eFile can work seamlessly with your payroll and accounting software. Choose the TIN Verification Report and eFile it, and the system will check for any discrepancies and inform you so that you can verify the information with your recipient and correct it.

If companies choose NOT to use a TIN matching service, it may be difficult and time-consuming to obtain IRS authorization for the TIN matching program. 

  • You may be required to request access months in advance of your need. 
  • The employee applying for TIN matching must provide their personal information to the IRS to access the TIN matching site. 
  • The information required includes the employee’s mobile number and specific personal financial account numbers. 
  • Two-factor authentication must also be set up.

Like many government services, this process may be challenging to follow, so the best practice is to utilize a service that can use the information directly from your software, make the matching request, and provide the results directly to you.

What Happens If There Is A TIN Error On A 1099?

When you file a 1099 with inaccurate TIN and name combination, the IRS issues CP2100 or CP2100A notices (error notice), letting you know that you may be responsible for backup withholding (24% of future vendor payments). 

If you file a second time with the same mismatch, you are then required to send B-Notices within 15 days to the payee and collect the correct information on the W-9 form or start backup withholding. The 24% in backup withholding must be remitted to the IRS per a strict Form 945 deposit schedule, and additional annual solicitation requirements exist.

The IRS penalty for a mismatched Tax ID/name combination could be as high as $280.00 per mismatched TIN/Name combination. You can avoid this penalty by using a TIN Matching service. 

Is TIN Matching Required?

TIN matching is not required, but it is recommended to make sure you are filing 1099s accurately.

How Does SSN Verification Work For W-2s?

SSN verification works very similarly to TIN matching but is submitted to the Social Security Administration instead of the IRS. Simply submit your employee information and correct any mismatches prior to filing W-2s.

Tax Identification Number (TIN) Matching and SSN verification services are available through Aatrix eFile and are included in our Unlimited Filing Packages. Learn more at: https://efile.aatrix.com/pages/public/PackagePricing2.aspx