What Is an IRS B Notice & How to Respond

The IRS relies on accurate taxpayer information for proper income reporting and tax processing. When discrepancies arise between information reported by payers and IRS data, the agency communicates with taxpayers to resolve these issues. This helps maintain tax system integrity and ensures income is correctly attributed.

Understanding IRS B Notices

An IRS B notice is an official communication regarding a mismatch in taxpayer identification information. These notices address situations where a Taxpayer Identification Number (TIN), such as a Social Security Number (SSN) or Employer Identification Number (EIN), provided to a payer does not align with IRS records. The primary purpose of a B notice is to inform the income recipient that the TIN on an information return, like a Form 1099 or Form W-2G, is either incorrect or missing. The initial B notice typically takes the form of a CP2100 or CP2100A notice. If the issue remains unaddressed, a second B notice may be issued.

Common Reasons for Receiving a B Notice

Taxpayers often receive a B notice due to data entry errors or inconsistencies in personal information. Common reasons include an incorrectly spelled name or an outdated name on an account. An incorrect or transposed Social Security Number (SSN) or Employer Identification Number (EIN) entered by either the taxpayer or the payer can also trigger a notice; even a single digit error can cause a mismatch.

Another frequent cause is failing to notify a payer of a name change or a new TIN promptly after a life event, such as marriage, divorce, or a business restructuring. For example, if an account is opened under a nickname or an individual’s SSN is used for a business account with an EIN, a B notice may be issued. A B notice may also be generated if a TIN provided to a payer belongs to another individual, such as a child’s SSN used for an adult’s investment account. The IRS cross-references names and TINs, issuing a B notice if there’s no match in their database.

Steps for Responding to a B Notice

Upon receiving an IRS B notice, review it to identify the specific payer(s) involved. The notice typically lists the payer’s name and income type, helping pinpoint the mismatch source. Contact the identified payer (e.g., bank, employer) to inform them of the notice and provide your correct Taxpayer Identification Number. To formalize the correction, complete and submit a Form W-9, Request for Taxpayer Identification Number and Certification, to the payer. This form certifies your correct name and TIN, ensuring the payer has accurate information.

Verify that the name on your account with the payer exactly matches the name associated with your TIN on file with the Social Security Administration or the IRS; minor deviations, like a missing middle initial or different name order, can cause issues. After submitting Form W-9, follow up with the payer to confirm they have updated records and will report correct information to the IRS. The payer typically has about 30 days from the notice date to obtain and report the correct TIN to the IRS. Keeping a record of your communication and the date you provided updated information is also prudent.

Outcomes of Not Responding

Failing to respond to an IRS B notice can lead to significant financial consequences. The most immediate outcome is “backup withholding” by the payer. If the TIN discrepancy is not resolved within the specified timeframe, the payer is required to withhold 24% of future payments and remit it directly to the IRS, significantly reducing income received.

Beyond backup withholding, the IRS may assess penalties for incorrect or missing Taxpayer Identification Numbers if the issue persists. These penalties can apply to both the payer and, in some cases, the payee, if accurate information is not provided. Penalties typically range from $50 to $290 per incorrect TIN, with higher penalties for intentional disregard. Continued non-compliance or unresolved B notices can also lead to more intense IRS scrutiny, potentially resulting in further correspondence, additional penalties, or an audit.

Preventing Future B Notices

Proactive measures can significantly reduce the likelihood of receiving future IRS B notices. Regularly verifying your personal information and Taxpayer Identification Numbers with all financial institutions, employers, and other entities that report income to the IRS is crucial. This includes checking account statements and year-end tax forms for accuracy of your name and TIN.

Promptly update any name changes, such as those from marriage or divorce, with all relevant entities and the Social Security Administration. Similarly, update address changes with the IRS and all payers to ensure accurate communications and records. When opening new accounts or starting new relationships with payers, double-check the accuracy of the TIN provided.