Part 5 — Publication 1281 — Backup Withholding

ACTIONS FOR MISSING TIN(S) AND INCORRECT NAME/TIN COMBINATIONS

This section provides an overview of the IRS matching process and the development of name controls.

The information returns you file must include a correct Name/TIN combination to allow us to match the information reported against the income included on the payee’s income tax return. We check whether a Name/ TIN combination is correct by matching it against a file containing all social security numbers (SSNs) issued by SSA or against a file containing all employer identification numbers (EINs) issued by IRS. Then we compare the name control on the payee document (if provided) to the name control on file. If a name control is not provided, we develop it from the name(s) provided on the first two name lines (up to 40 characters for each name line including spaces) of the information return. If we can match a provided name or a developed name control to the name control in our records, we consider it correct. If no match is found using this process, we consider the Name/TIN combination to be incorrect. The chart on the back of Form W-9 has information for payees about “What Name and Number to Give the Requester” of Form W-9.

Name Controls

A name control consists of up to four characters. To help ensure that the Name/TIN combination for an account matches the Name/TIN combination on IRS and SSA files, use the following information when you open an account for a payee.

Individuals

We develop a name control for an individual from the last name on the information return. For example:

Ralph Teak ; Dorothy Will ow; Joe McCe dar

If an individual has a hyphenated last name, we develop the name control from the first of the two last names. For example:

Joan Ceda r-Hawthorn; Victoria Wind sor-Maple

For joint accounts, regardless of whether the payees use the same or different last names, we develop the name control from the primary payee’s last name. For example:

Joseph Ash & Linda Birch; Edward & Joan Mapl e

Reminder: If a payee has changed his or her last name, for instance, due to marriage, he or she needs to inform the Social Security Administration (SSA) of the name change.

Hint: On name line one of the Form 1099, a payer should enter the payee’s first name and new last name (if the change has been made with SSA), or the payee’s first name, former last name, and new last name (if the change has not been made with SSA).

Sole Proprietors

We generally develop the name control (first name line) from the last name on the information return. For example:

Mark Heml ock; The Sunshine Cafe; Karen Birc h; Ace Computer Co.

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ACTIONS FOR MISSING TIN(S) AND INCORRECT NAME/TIN COMBINATIONS

Hint: Payers may enter a sole proprietor’s business, trade, or “doing business as” name on the second name line of the information return. However, the individual name must be provided on the first name line. When individual name is provided on the first name line as shown above, the Sole Proprietor can provide either SSN or EIN (TIN) information.

Estates

We develop the name control for a decedent’s estate from the decedent’s name on the first name line on the information return. The decedent’s name may be followed by the word “Estate.” (The TIN should be the one that was assigned to the estate.) For example:

Frank Whit e Estate Alan Greene, Exec

Estate of Frank Whit e John Black, Exec

Trusts and Fiduciaries

We generally develop the name control for a trust or fiduciary account from the name of the person in whose name the trust or fiduciary account was established. For example:

Jonathan Peri winkle Irrevocable Trust FBO Patrick Redwood Chestnut Bank, Trustee

Memo ry Church Endowment Trust John Waxbean, Trustee

Partnerships

We develop the name control for a partnership from the trade or business name of the partnership; if there is not any, we develop the name control from the last name of the first partner listed on the original Form SS-4 (which was used to apply for the EIN). For example:

(The) Oak T ree A.S. Greene, K.L. Black & O.H. Brown, Ptrs.

Bob Orange & Carol Black, et al Ptrs. d.b.a. The Merr y Go Round

E.F. Brown, M.S. White & T.J. Green, Ptrs. The Brow n & White Company

Other Organizations

We develop the name control for other organizations from the entity’s name on the original Form SS-4 (which was used to apply for the EIN).

St Be rnard’s Methodist Church Building Fund for St. Bernard’s Church

ABC C ompany Main Street Store

NOTE: Extraneous words, titles, and special characters (i.e., Mr., Mrs., Dr., and apostrophes, etc.), may be dropped during the development of name controls. For example, we dropped the period in St. Bernard’s Methodist Church.

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ACTIONS FOR MISSING TIN(S) AND INCORRECT NAME/TIN COMBINATIONS

First B Notice

IMPORTANT TAX NOTICE ACTION IS REQUIRED

Backup Withholding Warning!

WE NEED A FORM W-9 FROM YOU BEFORE: _______________________. Otherwise; backup withholding will begin on

Account Number Current Name on Account Current TIN on Account

The Internal Revenue Service (IRS) has notified us that the taxpayer identification number (TIN) on your account with us does not match its records. The IRS considers a TIN as incorrect if either the name or number shown on an account does not match a name and number combination in their files or the files of the Social Security Administration (SSA). If you do not take appropriate action to help us correct this problem before the date shown above, the law requires us to backup withhold on interest, dividends, and certain other payments that we make to your account. The backup withholding rate is: __ [set forth rates/dates] In addition to backup withholding, you may be subject to a $50 penalty by the IRS for failing to give us your correct Name/ TIN combination. This notice tells you how to help us make your account records accurate and how to avoid backup withholding and the penalty.

Why Your TIN May Be Considered As Incorrect.

An individual’s TIN is his or her social security number (SSN). Often a TIN does not match IRS records because a name has changed through marriage, divorce, adoption, etc., and the change has not been reported to SSA, so it has not been recorded in SSA’s files. Sometimes an account or transaction may not contain the correct SSN of the actual owner. For example, an account in a child’s name may reflect a parent’s SSN. (An account should be in the name and SSN of the actual owner.)

What You Need To Do for Individuals

If you have never been assigned a social security number (or if you lost your social security card and do not know your SSN), call your local SSA office and find out how to obtain an original (or a replacement) social security card. Then apply for it. If you already have a social security number: Compare the name and SSN on your account with us (shown at the beginning of this notice) with the name and SSN shown on your social security card. Then use the chart on the next page to decide what action to take.

IF THEN

The last name and SSN on your account agree with the last name and SSN on your social security card
Contact your local SSA office to ascertain whether the information on SSA’s records is different from that on your social security card, and to resolve any problem. Also, put your name and SSN on the enclosed Form W-9 following the instructions on the form. Sign the Form W-9 and send it to us.

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ACTIONS FOR MISSING TIN(S) AND INCORRECT NAME/TIN COMBINATIONS

IF THEN

The SSN on your account is different from the SSN on your social security card, but the last name is the same
The last name on your account is different from the last name on your social security card, but the SSN is the same on both
Put your name and SSN, as shown on your social security card, on the enclosed Form W-9, following the instructions on the form, sign it, and send it to us. You do not need to contact SSA.
Take one of the following steps (but not both):

a) If the last name on your account is

correct, contact SSA to correct the name on your social security card. Put your SSN and name shown on your account on the enclosed Form W-9 following the instructions on the form, sign it, and send it to us. However, if you are not able to contact SSA at this time, you can provide us with both last names. Put your SSN and the name shown on your social security card plus the last name shown on your account (in that order) on the enclosed Form W-9 following the instructions on the form, sign it, and return it to us. For example, if your social security card lists your maiden name, give us your SSN and your name in the following order: First/ maiden/married name. Please note, however, that you should contact SSA as soon as possible so they can correct their records.

b) If the last name on your social security

card is correct, put that name and your SSN on the enclosed Form W-9 following the instructions on the form. Sign it, and return it to us. You do not need to contact SSA.

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ACTIONS FOR MISSING TIN(S) AND INCORRECT NAME/TIN COMBINATIONS

IF THEN

Both the last name and SSN on your account are different from the last name and SSN on your social security card
Take one of the following steps (but not both):

a) If the last name and SSN on your social

security card are correct, put that name and SSN on the enclosed Form W-9 following the instructions on the form. Sign it, and send it to us. You do not need to contact SSA.

b) If the last name on your account and

the SSN on your social security card are correct, follow the procedure in section 3(a) above. Be sure to put the name shown on your account and the name on your social security card on the Form W-9.

Once you have resolved what your correct name and TIN combination is, you must provide this information to us (and all your other payors) for all of your accounts to avoid a problem in the future. If you are required to visit an SSA office, take this notice, your social security card, and any other related documents with you. Information regarding what documentation is needed to update information with the Social Security Administration is available at ssa.gov.

Instructions for Non-individuals and Certain Sole Proprietors

For most non-individuals (such as trusts, estates, partnerships, and similar entities), the TIN is the employer identification number (EIN). The EIN on your account may be incorrect because it does not contain the number of the actual owner of the account. For example, an account of an investment club or bowling league should reflect the organization’s own EIN and name, rather than the SSN of a member. Please put the name and EIN on the enclosed Form W-9, sign it, and send it to us.

A sole proprietor must furnish his or her individual name and either his or her SSN or the EIN for his or her sole proprietorship. In addition to his or her individual name, the sole proprietor may also furnish the business name for the sole proprietorship, provided his or her individual name is listed before the business name. A sole proprietor must not furnish only the business name. Please put the individual name and SSN or EIN on the enclosed Form W-9, sign it, and send it to us.

Important Reminder!

You must send us a signed IRS Form W-9 before the due date of this notice even if the name and number (SSN or EIN) on your account with us match the name and number (SSN or EIN) on your social security card or the document issuing you an EIN. If we do not receive your Form W-9, and any other documents that we need to change the name or TIN (or both) on your account before the date of this notice, we are required by law to backup withhold on any reportable payment that we pay to your account until we receive the necessary documents. A Form W-9 is enclosed for your convenience, as well as any additional documents allowing us to change the Name/TIN combination on your account.

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ACTIONS FOR MISSING TIN(S) AND INCORRECT NAME/TIN COMBINATIONS

Second B Notice

IMPORTANT TAX NOTICE ACTION IS REQUIRED

Second Backup Withholding Warning!

YOU MUST HAVE THE IRS OR SSA VALIDATE YOUR TAXPAYER IDENTIFICATION NUMBER AND RETURN IT TO US BY: ________________________________. Otherwise, backup withholding will begin.

Account Number Current Name on Account Current TIN on Account

We have received notice from the Internal Revenue Service (IRS) twice within 3 years stating that the combination of the name and taxpayer identification number (Name/TIN combination) on your account with us is incorrect. (Your account number, current name on the account, and current taxpayer identification number (TIN) on the account are shown above.) A Name/TIN combination is incorrect if it does not match a Name/TIN combination shown on the records of the Social Security Administration (SSA) or the IRS.

You should follow the instructions below to correct this problem and send the corrected information to us before the date shown above. If we do not have the correct information before that date, the law requires us to backup withhold on interest, dividends, and certain other payments that we make to your account. The backup withholding rate is: __ [set forth rates/dates]

Section 3406 of the Internal Revenue Code requires that we withhold a predetermined percent in tax, called backup withholding, when you do not give us your correct Name/TIN combination. Because of the notices we received from the IRS, we are now required to disregard any future Name/TIN combinations you furnish us for your account (whether or not you certify your TIN under penalties of perjury) unless SSA (or, in the case of an incorrect employer identification number, the IRS) validates your Name/TIN combination. Also, the IRS may charge you a $50 penalty for failing to provide us with your correct Name/TIN combination.

What You Need To Do

Follow the instructions below to correct your account record to avoid backup withholding on your account (or to stop it once it has begun) and to avoid the penalty.

Individuals

Instructions for Incorrect Social Security Numbers If the incorrect TIN you furnished us is a social security number, you must:

Provide us with a copy of your Social Security card. The social security card must show your correct name/SSN combination that differs from the name and SSN combination appearing on this notice or it must show a date of issuance that is no earlier than six months prior to the date on this notice. Send the copy directly to us with a copy of this notice attached.
If you do not have a card meeting the requirement in item 1, you must apply for a Social Security card by submitting SSA Form SS-5 to the SSA in person or by mail. That form and further information regarding application for a Social Security card is available at ssa.gov.
In addition to the required identifying information for obtaining a Social Security card, give a copy of this notice to the SSA.
Allow 7-10 business days for receipt of your Social Security card.
Once you receive your Social Security card, make a copy of the card and send the copy directly to us with a copy of this notice attached.

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ACTIONS FOR MISSING TIN(S) AND INCORRECT NAME/TIN COMBINATIONS

Non- individuals or Certain Sole Proprietors

Instructions for Incorrect Employer Identification Numbers If the incorrect TIN you furnished is an employer identification number, you must:

Write the Internal Revenue Service Center where you file your income tax return, and ask the IRS to send you a Letter 147C;
Enclose a copy of this notice in your letter to the Internal Revenue Service Center; and
When the IRS sends you the Letter 147C, send it to us with a copy of this notice attached.

Note: Internal Revenue Service Center address information can be found at www.irs.gov.

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