CP2100A Notices - What the heck does that mean?

Josh Nowack

May 1, 2015

We have seen an increase in the number of CP2100A letters issued by the IRS.  This is the letter issued when the social security number listed on an information return, such as a 1099-MISC or a W-2, doesn't match the name per the social security administration.  

The letter is cryptic, hard to read and hard to know the right thing to do.  Kind of like the rest of taxation.  Anyway, the letter is a notice telling you there's a mismatch between name and SSN.  It goes on to say that if you realize that you made the mistake, please don't do it again and have your employee or contractor complete Form W-9 (www.irs.gov/pub/irs-pdf/fw9.pdf) again.  

If the name and social security number are indeed correct, then the IRS says you should do what's called backup withholdings.  This is for when your contractor is not recognized by the social security admin.  The concern here is that the IRS really thinks that your contractor is either undocumented or otherwise at high risk for not filing a tax return altogether.  The short answer here is that if the names aren't matching, there is likely a severe problem.  In short - call me and let's discuss.  If the ssn is correct and the name is correct and the SSA doesn't have a record of either, then there's likely a severe problem.

It is yet one more reason to have your contractors complete Form W-9 BEFORE you make any payments to them.  Good luck tracking them down in January after their work is complete.  

Now, it is incumbant on you to fix the matter.  How?  Get the W-9 and don't make the same mistake next year.  Why?  The IRS may issue you a penalty for making the same mistake twice.  You actually don't have to do anything about 2013 and prior.  

Going forward, any 1099-MISC forms that Nowack files will go through a SSN validation service to avoid the issue going forward.  However, we cannot sufficiently stress the importance of receiving W-9 forms before making any payments to your contractors.

 

   

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