B-Notice Education FAQ
What is a B-Notice?
A B-Notice is a backup withholding notice. There are two B-Notices – the First B-Notice and the Second B-Notice. You must send the First B- Notice and a Form W-9 to a payee after you receive the first CP2100/CP2100A Notice with respect to this account for the purpose of soliciting a correct name and Tax Identification Number (TIN) combination.
The text of the Second B-Notice is different than the First B-Notice. It tells the payee to contact the IRS or SSA to obtain the correct name/TIN combination. The mailing of the second notice should not include a Form W-9. You must send the Second B-Notice after receiving the second CP2100 or CP2100A with respect to this account. The payee must certify the name/TIN combination after receiving the Second B-Notice. Generally, you do not have to send a B-Notice more than two times within three calendar years to the same account.
Are there any changes to B-Notice processing for 2011?
No, but a few items to keep in mind:
In 2010 the IRS began requiring a Social Security Number Printout to satisfy a Second B-Notice.
The IRS has lifted the threshold for 1099-Int’s, which in some cases resulted in many additional notices for anyone using this form type.
For the first time in 2011, the IRS will begin to include Form 1042-S on Penalty Notices (972CG). Previously this form was excluded from the Penalty Notice file.
How do I know if the TIN on my account is incorrect?
The IRS will send you a CP2100 or a CP2100A Notice and a listing of incorrect name/TINs.
After I receive a CP2100 or CP2100A notice, when do I start and stop backup withholding?
You must start backup withholding on all reportable payments to the payee 30 business days after you have received the CP2100 or CP2100a Notice if an appropriate response is not received. If it is a First B-Notice, you must stop backup withholding on payments 30 calendar days after you have received the required W-9 from the payee. If it is a Second B-Notice, TIN validation from the SSA or IRS is required to stop backup withholding. You can start and stop backup withholding at any time during these 30 day periods.
If I don’t have the correct mailing address for a recipient, do I have to backup withhold?
Yes, you should begin withholding, and find the correct address so you can update your records with the correct address.
What happens if the recipient returns the W-9 with the same information?
Make sure you document the receipt of the W-9 and any information recorded on it; however you will not need to start backup withholding. For more information, please email or call 888-303-1099.
Is a payee an exempt corporation if it uses the term "Company" or "Co." in its name?
A payer cannot treat a payee as an exempt organization merely because the business name contains the words "Company" or "Co." A payer can only treat the payee as exempt if:
The company name contains any of the following terms: insurance company, indemnity company, reinsurance company, or assurance company.
The company name indicates that it is an entity listed as a corporation under IRS Regulations, section 301.7701-2(b)(8)(i).
The payer has on file a corporate resolution, or similar document, clearly indicating corporate status.
The payer receives a W-9 with an Employer Identification Number (EIN) and a statement from the payee identifying the payee’s company as a domestic corporation.
The payer receives a withholding certificate (described in Section 1.1441-1(e)(2)(i)), certifying that the person listed on the certificate is a foreign corporation.
Can I stop backup withholding if I receive an updated TIN or name over the phone?
No, you must physically receive (via mail or fax) a valid W-9, Social Security Number Printout, or IRS Letter 147C to stop backup withholding.
Need more information? The IRS website is a great resource: www.irs.gov