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B-Notice | Tax Information Reporting Skip to main content

When is it necessary to have a Form W-9 signed . . .

Question

When is it necessary to have a Form W-9 signed under penalty of perjury?

Answer

For payments of interest, dividends and broker gross proceeds. Also, when you are requesting a new Form W-9 from a payee in response to a "first" B-Notice.

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We have a vendor who recently responded to a "second" . . .

Question

We have a vendor who recently responded to a "second" B-Notice by sending us his correct TIN, but not by providing the letter or form we requested. Can we accept this as documentation for our records?

Answer

No, not as documentation that will prevent backup withholding from applying to payments to this vendor. The only acceptable documentation in response to a second B-Notice letter is Form 7028 from the Social Security Administration or letter 147C from the IRS. If you do not obtain the correct documentation from this payee, you will have to backup withhold on all payments until he can provide the appropriate SSN or IRS proof of TIN.

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Once we have updated our systems with the responses to . . .

Question

Once we have updated our systems with the responses to our B-Notice letters, do we file corrected returns with the IRS?

Answer

No. The Regulations (Sec. 301.6724-1) specifically state that you do not file corrected returns. Instead, you update your system using the information the payee has returned to you and use that for all future filings. In addition, keep the documentation provided to you by the payee on file; you will need it in your "Reasonable Cause" defense if you receive a penalty notice from the IRS in the future.

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Our company has not received a B-Notice from the IRS. . . .

Question

Our company has not received a B-Notice from the IRS. Should we assume our information was correct on the Forms 1099?

Answer

No. The safest course is to contact the IRS Martinsburg Enterprise Computing Center 866-455-7438 and ask whether a B-Notice was issued to your company. If one was issued, you can tell Martinsburg that it has not been received and request that it be sent again (verify the mailing address). Your official date for counting the 15- and 30-business-day B-Notice time periods will be the date you receive it.

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If a client to whom we have already sent a . . .

Question

If a client to whom we have already sent a 2nd B-Notice, and are currently backup withholding from, appears on a future B-Notice from the IRS, do we need to continue notifying the client?

Answer

After your initial "second" B-Notice mailing to the vendor, you do not need to continue notifying the payee if they did not respond and you are withholding. Just continue to backup withhold from the client until they send you the correct information.

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When sending out B-Notice letters, are we required to provide . . .

Question

When sending out B-Notice letters, are we required to provide a return envelope with the notices? If so, is prepaid postage required?

Answer

No, the IRS does not require you to include a return envelope with your B-Notice letters. However, we recommend that you do send a return envelope addressed to you. Some payers even provide a postage-paid envelope, because they believe that it increases the rate of response from B-Notice payees.

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A third party handles the processing of our Forms 1099, . . .

Question

A third party handles the processing of our Forms 1099, but we have received the B-Notice list regarding name/TIN mismatches. How do we handle this issue?

Answer

If you are the payer for Form 1099 purposes and the third party just creates the 1099 filing for you, you are still responsible for seeing that IRS B-Notices are properly processed, mailings are done, and documentation is kept and new information entered into your system; and you are ultimately responsible for Form 1099 penalties if penalties ensue in future years as a result of documentation failures or failures to implement the B-Notice procedures.

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Our third party mailed our B-Notice letters to our payees . . .

Question

Our third party mailed our B-Notice letters to our payees without the "Important Tax Information" disclosure. Are we now required to send new solicitations with this language included?

Answer

It would probably help your future discussions with the IRS if you sent a new, fully-compliant B-Notice mailing. Document both mailings (samples, dates, lists, actions before and after mailing, etc.). Also document your correspondence with your third-party service provider in which you notify them of their error and take steps to ensure that such an error does not happen again.

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We received a B-Notice and need to contact some of . . .

Question

We received a B-Notice and need to contact some of the vendors on the list. Where can we obtain information on how to compose a B-Notice letter?

Answer

IRS Publication 1281 includes the language of Rev. Proc. 93-37, which must appear in B-Notice letters you send to your payees.

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Are you aware of any regulations prohibiting B-Notices from being . . .

Question

Are you aware of any regulations prohibiting B-Notices from being sent in Spanish for those clients who have indicated a preference for correspondence in this language?

Answer

We are not aware of any tax Regulations addressing the question of whether you can send B-Notice letters in Spanish (or other languages). You can contact the IRS to ask this question by email at mccirp@irs.gov.

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