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I got a letter from the IRS about an incorrect 1099 I filed. What has hapened?

You filed a 1099 with data that doesn’t match IRS records.  So, the IRS sent you a notice CP2100 or CP2100A that tells you that one or more 1099s you submitted have a missing or incorrect Taxpayer Identification Number, name or both.

These notices also tell you that you may be required to backup withhold tax payments. Future payments may be subject to backup withholding, currently 24%, if the person for whom you filed the 1099 does not give you their TIN in the required manner or the IRS tells you the person gave you an incorrect TIN and didn’t certify their TIN as required.


The letters will also advise you that you are responsible for any amount you fail to backup withhold and the penalties that may apply.


Best practice: Get the person you will be paying to give you Form W-9, Request for Taxpayer Identification Number and Certification, before paying them anything. This will accomplish 2 things. It will avoid pressure to get the information at the end of the year so the 1099s can be filed by January 31. It will also enable you to avoid the backup withholding problem for you and your worker. Telling workers about the 24% withholding rate might give them incentive to cooperate.

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