Chris268
Level 3

Client received a CP2100A from the IRS for tax year 2018 for a 1099-MISC.  The notice states that if the name and taxpayer identification number on my records match what they have listed on the notice, then something was not reported correctly.

I checked all my records and have a signed W-9 from the recipient with the name and EIN and this was used on the 1099-MISC and is the same as what the IRS has, which means that the recipient must have given me the wrong EIN.

The notice continues to say that I need to contact him within 15 days with a "B" notice, which means I have to ask for the W-9 and a copy of the IRS Letter 147C for the EIN.

The notice continues to tell me to start backup withholding.

This concerns a roofer who did work in 2018 to install new roofs and will probably never be hired again since most people don't get roofing done twice.  He was paid in full in 2018 so there are no more payments, so there is nothing from which to withhold backup taxes and will probably never receive another 1099 from the client. 

The notice then adds all the penalties for not complying with the notice and withholding backup taxes at 24%!

It concludes with the statement that a corrected 1099 is not required and no communication with the IRS is necessary.

Is it really necessary for me to contact this contractor from 2018 just to be in compliance with the IRS?  Do I really need a corrected W-9 from him?

Thanks.

 

 

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dd4vols
Level 10
Level 10

NO!   Not unless you hire him again, and intend to issue him another Form 1099-Misc in the future.

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Chris268
Level 3

Thank you very much.

kwthetaxguy
Level 2

I appreciate the answer and it seems logical; however, do you have any language from the IRS that cites your answer? I am not attempting to be difficult, but with all things IRS, I would like to have something concrete to point to. 

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qbteachmt
Level 15

I got the same thing for a Dead person, and since that means he would never be hired again, I never took any action and never heard anything more about this. I checked the paperwork and the person had the same info all those years, so who knows what went wrong at the IRS end of things.

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rbynaker
Level 13

@kwthetaxguy wrote:

I appreciate the answer and it seems logical; however, do you have any language from the IRS that cites your answer? I am not attempting to be difficult, but with all things IRS, I would like to have something concrete to point to. 


Do you have a copy of the letter?  I haven't seen one recently but it used to be that the letter clearly explained the steps you need to take.

qbteachmt
Level 15

I seem to recall confirming what numbers I put on the 1099-Misc to the IRS letter, and they had input it wrong. This is what you are told:

"What to do if you receive a CP2100 or CP2100A Notice?

Compare the listing(s) with your records.

  • For missing TINs: Determine if you are already backup withholding on the account. If you are not, begin backup withholding immediately. You must make up to three solicitations for the TIN (initial, first annual, second annual) to avoid a penalty for failing to include a TIN on the Information Return.
  • For incorrect TINs: Compare the accounts on the listing with your business records. If they agree, send the appropriate "B" Notice to the taxpayer (payee). If an account does not agree, this could be the result of a recent update, an error in the information you submitted, or an IRS processing error. If this is what happened, the only thing you should do is correct or update your records."

https://www.irs.gov/businesses/small-businesses-self-employed/backup-withholding-b-program

 

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Chris268
Level 3

Yes, the notice states, "If they agree, send the B notice."  The accounts did agree.  The question was still, should I contact that contractor?  The letter stated explicitly that I do not need to contact the IRS or prepare a corrected 1099.  This implies to me that they already know he gave them the wrong number.  Whether he was cheating on his taxes or not remains unknown.  It was a substantial payment.  They have his name and address, of course.  

I did not send the B notice because there will never be any future contact with him and cannot be backup withholding.

 

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qbteachmt
Level 15

"The question was still, should I contact that contractor?"

You would do this to notify the person that the info is considered wrong by the IRS, and you have them bring their letter that provides the official notice of their FEIN (or SSN card). And that would only matter if you are hiring them again. I would flag the current W-9 and any file you maintain for that person that this condition exists, before working with them next time.

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Chris268
Level 3

Thank you very much.

I did inform this contractor of the notice and I did request a copy of the official letter for the EIN or the Social Security card as well as a corrected Form W-9.

I decided to do this as a service to him and maybe he will be my next new client since he must be having a problem.  

I was thinking of this procedure as an imposition and burden rather than as a service to him.

I have no idea if he will respond.

Thanks!