Think the previous article about backup withholdings sounds like an unfair penalty? Well, if you’re concerned about your interest income that might be subject to it, you’re in luck. The IRS has made it so backup withholdings can only happen in very specific circumstances.

Back off the backup withholdings

The IRS maintains the Taxpayer Identification Number (TIN) Matching Program in an effort to reduce backup withholdings and the penalties that follow. TIN Matching Program allows third party payors to be able to match and verify TIN information. Payors, such as brokerages, consult the IRS TIN Matching Program when handling a client’s tax information to prevent backup withholding penalties from the IRS. The TIN Matching Program has been around since 1997. Just like many other programs through the IRS, it is also now available online.

TIN Matching database

“Authorized payers and authorized agents”, such as brokerages, who have filed 1099 forms with the IRS in the past two years can use the TIN Matching program. To participate, interested authorized payers register online to use the IRS’s e-services. Currently, there are no fees involved in using the IRS’s TIN Matching services. It is accessible 24/7 aside from any scheduled downtime maintenance.

Once the user has registered and set up their account, they can log into the TIN Matching Program and begin entering TIN numbers to match into the IRS’s database of TINs. Users can enter up to 25 different TINs each session at a time. Once the information has been submitted, the results will come back with “Match Indicator” noted specifying which TINs match up with the IRS’s records. This process is known as “Interactive TIN Matching”.

For those that may need to match up much larger amounts of data, the TIN Matching Program also has a “Bulk TIN Matching” system where you can upload a simple text file of a document with the TIN type, TIN, name, and an optional account number field in the following format:

TIN TYPE; TIN; NAME; ACCOUNT NUMBER
TIN TYPE; TIN; NAME; ACCOUNT NUMBER
TIN TYPE; TIN; NAME; ACCOUNT NUMBER

The program will then match the data with its records and send back a text file document with the results of “match indicator” noted next to each item of data.

 

The TIN Matching Program is a useful resource for payers and interested parties. If you found this article informative and useful, follow us on our social media pages for future articles about tax resources.  MiklosCPA is a Los Angeles-area accounting firm that supports businesses with their tax services and back-room accounting services to our client’s specifications and requests. If you want to learn more about our services, please contact us!

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