The Benefits of Taxpayer Identification Number (TIN) Matching

Taxpayer Identification Number (TIN) MatchingOne of the key components of the supplier validation process is Taxpayer Identification Matching (TIN) Matching.  TIN Matching is free service provided by the IRS through their eServices offering. As noted as a best practice, it is important to match the TIN provided on the supplier’s W-9 with the TIN on file with the IRS when you set up the supplier in your master file.. The IRS’s TIN Matching Program was established for payers of Form 1099 income subject to the backup withholding provisions of section 3406(a)(1)(A) and (B) of the Internal Revenue Code. Prior to filing an information return, a program participant may check the TIN furnished by the payee against the name/TIN combination contained in the Internal Revenue Service database maintained for the Program.

TIN Matching is part of a suite of internet based pre-filing e-services that allow  “authorized payers”  the opportunity to match 1099 payee information against IRS records prior to filing information returns. An authorized payer is one who has filed information returns with the IRS in at least one of the two past tax years.  Interactive TIN Matching will accept up to 25 payee TIN/Name combinations on-screen while Bulk TIN Matching will allow up to 100,000 payee TIN/Name combinations to be matched via a text file submission.

TIN Matching Functionality

  • Both programs match the payee with W-9 name and TIN with IRS records;
  • TIN Matching decreases backup withholding and penalty notices;
  • Lastly, TIN Matching reduces the error rate in TIN validation.

Registering for IRS eServices

In order to use the program, filers must complete the eServices registration application. The registration application can be found at: http://www.irs.gov/Tax-Professionals/e-services—Online-Tools-for-Tax-Professionals The registration application requires the registrant to submit personal individual information. While the IRS realizes that registrants are utilizing the TIN Matching Program on behalf of their employers, registrants must negotiate the eServices “gateway” prior to gaining access to the TIN Matching Program. Security concerns require that the registrant provide personal information in order to verify the registrant’s identity. In addition, it is through the registration process that a user self-selects a user name, personal identification number (PIN), and password. Once registration is complete, the registrant’s personal information is not retrievable by other users of the program. The information requested in the initial on-line IRS application includes:

  • Legal name (it will be verified with IRS & SSA records)
  • Social Security Number (it will be verified with SSA records)
  • Date of birth (it will be verified with SSA records)
  • Telephone number
  • E-mail address
  • Adjusted Gross Income (AGI) from either your current year or prior year filed tax return (it will be verified from IRS records)
  • Username. Select your preferred username. Please read the rules for selecting your username
  • Password and PIN. Select your password and PIN. Please read the helpful hints on selecting a secure, unique password and PIN
  • Reminder question to recover a forgotten username
  • Home mailing address (it will be verified from IRS records). If you have moved since you last transacted with the IRS, you are requested to please update your information when registering.

The IRS system will process this on-line registration, and the IRS will send a Confirmation Code, by mail, to the individual who has registered.  When the person receives the Confirmation Code, the person goes back on line to the IRS site at https://la2.www4.irs.gov/e-services/Registration/index.htm

to input the Confirmation Code which completes the registration.  After that step is completed, the registered individual can select TIN Matching services, and set up the company information for TIN Matching use.   Initial registration must be completed by an organization’s principal—an owner or officer. Once the initial registration is complete, the principal may delegate other users to utilize the program on behalf of the organization. For the same reasons noted above, each of these users must complete the registration application. These users will be asked during the registration process to identify themselves as a responsible official, an authorized agent, or a delegated user.

TIN Matching Benefits

Once you operationalize the TIN Matching process as part of your supplier validation and management process, you’ll have the following benefits listed below.

  •  Ensures 1099 accuracy.
  • Eliminates B-Notices.
  • Provides fraud prevention since the matching process ensures suppliers are “legitimate.”
  • The TIN Matching process can identify duplicate suppliers and can be a catalyst for cleaning up your supplier master file.

Tagged with → • • •  
Author

Chris Doxey

Chris Doxey has held senior finance, internal controls, and controller positions at Digital Equipment Corporation, Compaq Computer Corporation, and Hewlett Packard. As a result of her background in internal controls, she was recruited to implement the SOX 404 requirements at MCI (Formally WorldCom). Chris has an extensive background in accounts payable, procurement, payroll, logistics, project management, compliance, fraud prevention, internal controls, and financial system integration. She provides best practice solutions in these areas as an independent management consultant. She holds a BA in English, a BS in Accounting, an MBA, and a Graduate Certificate in Project Management. She is a Certified Accounts Payable Professional (CAPP) and holds a Certification in Controls Self-Assessment (CCSA) and is a Certified Internal Controls Auditor (CICA). She has been a member of the International Accounts Payable Professional (IAPP) organization for 11 years and is president of the DC, MD, and NOVA Chapter. Chris is a regular contributor to the White Collar Crime Fighter Newsletter, and the New Perspectives magazine published by the Institute of Healthcare Internal Auditors (AHIA). She is also a member of the Institute of Internal Auditors (IIA), the Institute of Financial Operations (IFO), the Institute of Financial Management (IOFM), and is on the advisory board of the Institute for Internal Controls (The ICC). Chris is a sought after speaker and thought leader. She has published two handbooks, "Implementing a Controls Self-Assessment (CSA) Program in your AP Department" and “Accounts Payable Leadership Skills.” She is currently working with the IOFM to launch a certification program for controllers. She is finalizing a best practices guide and toolkit also for controllers.

  • dambrol

    Wouldn’t it be great, then, to be able to attach a scanned W-9 to the vendor record in SciQuest???