CP2100 and B notices: the payer's response playbook

Who this page is for

This guide is for payers and the accounting or bookkeeping firms supporting them after a CP2100 or CP2100A arrives. It follows IRS Publication 1281 in the order the payer must make decisions: compare the listing, identify missing versus incorrect TINs, determine first versus second notice status for each account, send the required notice, and track the applicable cure and withholding clock.

The backup withholding rate, trigger framework, and exempt-payee rules are covered on the backup withholding rules page. This page owns the CP2100 and B-notice response process.

What CP2100 and CP2100A mean

The current IRS notice page states that CP2100 is issued when a payer filed 50 or more information returns with errors and CP2100A is issued when the payer filed fewer than 50 information returns with errors. The notices otherwise contain the same information and instructions (IRS Understanding Your CP2100 or CP2100A Notice).

Each notice identifies missing, incorrect, or not currently issued payee TINs and tells the payer that backup withholding may be required (IRS Publication 1281).

CP2100 and CP2100A communicate mismatch and backup-withholding duties. Proposed civil penalties use Notice 972CG and a separate process (IRS Publication 1281).

First move: compare the listing to the payer's records

Publication 1281 requires the payer to compare each listed account with its records before sending a B notice (IRS Publication 1281).

When the listing does not agree with the payer's records:

• If the payer reported incorrect information, correct the payer's records and use the correct information on future returns. Do not send a B notice or send a correction to the IRS solely for that mismatch.
• If the payee's information changed after the return was filed, update the payer's records and future filings. Do not send a B notice.
• If the IRS misprinted the submitted information, note the issue in the payer's records and take no further action.
• If the payer knows the account was already corrected, do not send another B notice merely because it still appears on a listing produced before the correction was processed.

When the listing agrees with the payer's records, determine whether this is the first or second notification for that account within three calendar years. The IRS notice does not identify that status for the payer. The payer must track it by account (IRS Publication 1281).

Missing TINs use a separate procedure

A missing TIN includes a TIN that was not provided or is obviously incorrect, such as a number with the wrong number of digits or a mixture of numbers and letters (IRS Publication 1281).

For a missing or obviously incorrect TIN:

1. Begin backup withholding immediately on reportable payments if withholding has not already started.
2. Continue withholding until a TIN is received.
3. Do not send a first or second B notice in response to the CP2100 or CP2100A.
4. Make the required TIN solicitations.
5. Report and deposit withheld amounts through the applicable Form 945 process (IRS Publication 1281, IRS Instructions for Form 945).

The solicitation schedule is:

• Initial solicitation when the account is opened or the transaction occurs.
• First annual solicitation by December 31 of the year the account was opened when it opened before December.
• For an account opened during December, first annual solicitation by January 31 of the following year.
• Second annual solicitation by December 31 of the year following the calendar year in which the account was opened if the TIN remains missing (IRS Publication 1281).

No annual solicitation is required for a year in which no reportable payment is made (IRS Publication 1281).

The first B notice

For the first incorrect name and TIN notification for an account within three calendar years:

1. Send the first B notice, Form W-9, and an optional reply envelope within 15 business days from the CP2100 or CP2100A date or the date the payer received it, whichever is later.
2. Date the B notice no later than 30 business days after that same whichever-is-later date.
3. Mark the outer envelope IMPORTANT TAX INFORMATION ENCLOSED or IMPORTANT TAX RETURN DOCUMENT ENCLOSED.
4. Include the required notice information and a return address when no reply envelope is included.
5. Request the correction in writing. Publication 1281 states that the information may not be solicited by telephone (IRS Publication 1281).

When the payee does not return a signed Form W-9, begin backup withholding no later than 30 business days after the CP2100 or CP2100A date or receipt, whichever is later. Publication 1281 permits the payer to begin as early as the day after receipt of the CP2100 notice (IRS Publication 1281).

Stop backup withholding no later than 30 calendar days after receiving the signed Form W-9. The payer may stop at any point within that 30-calendar-day period (IRS Publication 1281).

Sending the B notice satisfies the annual solicitation requirement for an incorrect TIN (IRS Publication 1281).

When a first-notice payee returns a Form W-9 containing the same name and TIN combination that the IRS identified, keep the certified Form W-9 in the payer's records and do not begin backup withholding for that first-notice response (IRS Publication 1281).

The second B notice

A second notification for the same account within three calendar years requires the second B notice and source validation.

1. Send the second B notice and an optional reply envelope within 15 business days after the CP2100 or CP2100A date or receipt, whichever is later.
2. Date the second B notice no later than 30 business days after that same whichever-is-later date.
3. Use one of the two required outer-envelope markings.
4. Do not include Form W-9. The payer must disregard a W-9 furnished in response to the second notice (IRS Publication 1281).

The required validation depends on the TIN type:

• SSN: a copy of the Social Security card. The payer may rely on the card only when the name and SSN differ from the combination shown on the second B notice, or the card carries a date no earlier than six months before the second B-notice date.
• EIN: IRS Letter 147C.
• ITIN: IRS Letter 685C.
• ATIN: IRS Letter 096C (IRS Publication 1281).

Allow 30 business days after the date of the second B notice to receive the required validation. The payer may begin backup withholding at any point during that period and must begin when the validation has not arrived by the 30th business day. Continue withholding until the validation arrives (IRS Publication 1281).

Stop backup withholding no later than 30 calendar days after receiving the required validation. The payer may stop at any point within that period (IRS Publication 1281).

Account-level sequencing rules

Publication 1281 establishes these additional rules:

• A second CP2100 or CP2100A received in the same calendar year as the first may be disregarded, even when it relates to a different tax year.
• A second notice received in a different calendar year may also be disregarded when both notices concern the same payee account for the same calendar year.
• The payer is responsible for tracking whether a notice is the first or second notification for each account.
• A third or later notice may generally be ignored when the payer completed the first- and second-notice actions and the name, TIN, and account number remain unchanged.
• A different name and TIN combination for the same payee restarts the sequence as a first notice (IRS Publication 1281).

Undeliverable and one-time-payee rules

When a B notice is returned as undeliverable:

1. Begin backup withholding.
2. Try to obtain a correct address and remail the notice.
3. Retain the undelivered notice for three years to track the two-in-three-year rule, or until a valid address is obtained (IRS Publication 1281).

For a one-time payee, send the required B notice and track the account for three years after the first CP2100 or CP2100A. A B notice is not required when no payment was made to the account and no information return was required for that account for the year (IRS Publication 1281).

Awaiting-TIN certificates and payer liability

The 60-day awaiting-TIN treatment applies only to interest, dividends, and certain payments relating to readily tradable instruments. It does not apply to nonemployee compensation or other reportable payments outside those categories. Nonemployee compensation remains subject to immediate backup withholding even while the payee is applying for a TIN (IRS Instructions for the Requester of Form W-9).

A payer that does not collect required backup withholding may become liable for the uncollected amount (IRS Instructions for the Requester of Form W-9).

The clocks at a glance