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Federal Tax

Reminder: IRS Information Return Error Notices

Checkpoint Federal Tax Update Staff  

· 5 minute read

Checkpoint Federal Tax Update Staff  

· 5 minute read

The IRS is reminding payers such as banks, credit unions, and businesses that file information returns to check their returns for mismatch errors before filing them.

Information returns.

Generally, businesses are required to report to the IRS payments made in the course of their trade or business of $600 or more to a single payee. These payments are reported on information returns, usually a form in the 1099 series.

When a payer files an information return containing data that doesn’t match the IRS’ records (mismatch error), the IRS sends the filer a CP2100 or CP2100A notice. These notices tell payers that the information returns they submitted have a missing or incorrect Taxpayer Identification Number (TIN), name, or both.

Note. The most common errors are transcription errors in the name of the payee and/or their TIN.

Each notice contains a list of payees and the mismatch errors identified by the IRS. Filers need to compare the information on the notice with their account records and correct or update their records, if necessary.

Backup withholding.

CP2100 and CP2100A notices also tell filers they may need to correct their backup withholding on payments made to payees.

Payments reported on a form in the 1099 series or Form W-2G, may be subject to backup withholding if:

  • The payee doesn’t:
    • Provide their TIN to the payer in the required manner, or
    • Certify that they aren’t subject to backup withholding for underreporting interest and dividends.
  • The IRS tells the payer:
    • The payee gave an incorrect TIN and didn’t certify their TIN as required, or
    • They must begin backup withholding because the payee didn’t report all their interest and dividends on their tax return.

The IRS reminds filer/payers that they are responsible for any amount they fail to backup withhold and that penalties for failure to take correct backup withholding may apply.

For more information about payee certification to avoid backup withholding, see Checkpoint’s Federal Tax Coordinator ¶ J-9400.


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