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5 Easy Steps for Validating Tax IDs Before Submitting 1099-K Forms to the IRS

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This guide is intended for businesses and companies required by the IRS to file 1099-K (Merchant Card and Third Party Network Payments) forms. Before submitting 1099-K forms with the IRS, filers are required to validate the Tax IDs (Social Security Number or Employer Identification Number). Submitting information returns with incorrect information or Tax ID might cause in IRS penalties, which have increased in 2012.

The simple way to validate Tax IDs is to follow an easy 5-step procedure:

1. Register with the IRS E-Services Online.
2. Generate a Bulk TIN Matching request file.
3. Upload the request file to the IRS E-Services website.
4. Wait for 24 hours and then download the TIN matching response file.
5. Review the response file and correct any invalid Tax Ids.

1. Register with the IRS E-Services Online.

IRS E-Services is a suite of web-based products that will allow tax professionals and payers to conduct business with the IRS electronically.

Point your browser to IRS e-Services website and follow the detailed instructions to register with e-Services.

2. Generate a Bulk TIN Matching request File.

This is a very crucial step and you need to be very careful to generate the file properly and follow the IRS guidelines carefully.

The request file needs to be created in .txt file format as follows:

TIN TYPE, TIN NUMBER, NAME, ACCOUNT NUMBER (OPTIONAL)

TIN Type can be one of the following values:

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TIN Number is SSN or EIN for the taxpayer.
Name is the taxpayer’s full name or business name.
Account Number is an optional field that may contain payer provided information such as a bank account number. I suggest you ignore this field and not include it in the file.

Important Note: Remember to avoid including the same recipient with different tax IDs in the file twice. This will get the file rejected by the IRS.

You can either prepare the file manually or use third-party 1099-K software that can prepare TIN Matching request files.

3. Upload the request file to the IRS E-Services website.

Now you will need to log into the IRS e-Services website and upload the request file you generated in the previous step. Navigate to the “Bulk TIN Session: Bulk Request” screen, click the Browse button, select the request file path and then hit submit. This will transmit the file to the IRS for processing.

4. Wait for 24 hours and then download the TIN matching response file.

Allow for 24 hours and then log into your IRS e-Services account. Navigate to your secure inbox and you should find a response file. Download the file locally to your machine.

5. Review the response file and correct any invalid Tax Ids.
Open the response file you downloaded in the previous step using your favorite text edit program, I recommend using Notepad. Now you will need to go through the rows one by one and investigate the TIN matching indicator:

  • “0” – indicates the name/TIN combination matches IRS records.
  • “1” – indicates TIN was missing or TIN is not a 9 digit number.
  • “2” – indicates TIN entered is not currently issued.
  • “3” – indicates the name/TIN combination do not match IRS records.
  • “4” – indicates an invalid TIN Matching request.
  • “5” – indicates a duplicate TIN Matching request.
  • “6” – (matched on SSN), when the TIN type is (3), unknown, and a Matching TIN and name control is found only on the NAP DM1 database.
  • “7” – (matched on EIN), when the TIN type is (3), unknown, and a matching TIN and name control is found only on the EIN/NC database.
  • “8” – (matched on EIN and SSN), when the TIN type is (3), unknown, and matching TIN and name control is found only on both the EIN/NC and NAP DM1 databases.
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Once you’ve identified recipients with invalid Tax IDs you will need to contact them in order to get the correct ID. The preferred method is to send each recipient a W-9 form to fill out.

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