A CP2100A notice from the IRS is a list of payee name-and-TIN combinations on information returns you filed (typically Forms 1099) that don’t match IRS or Social Security Administration records.1Internal Revenue Service. Understanding Your CP2100 or CP2100A Notice It isn’t a bill and it isn’t a penalty, but it starts a clock. You have 15 business days to send corrective “B-Notices” to the affected payees, and if they don’t respond you must begin backup withholding at 24% within 30 business days of the notice date. Ignoring the notice can cost up to $340 per incorrect return plus the full amount of any tax you should have withheld.
What the Notice Actually Says
The IRS mails these notices twice a year, in October and the following April. Each one identifies specific accounts and the type of error: a missing TIN, an incorrect TIN, or a name-and-TIN mismatch.1Internal Revenue Service. Understanding Your CP2100 or CP2100A Notice The mismatch might be a typo on your side, a name change after marriage, or a payee who gave you the wrong number.
The only difference between a CP2100A and a CP2100 is volume. Fewer than 50 errors gets you the CP2100A; 50 or more gets you the CP2100. Your obligations are the same either way.
Step One: Compare and Send First B-Notices
Before contacting anyone, compare the IRS’s list against your own records. If the error was on your end — a transposed digit at data entry, for instance — fix it internally and move on. No further action is required for that account.
When your records match what the IRS flagged, you have to send a formal First B-Notice to the payee within 15 business days of the date on the CP2100A. The envelope must be marked “IMPORTANT TAX INFORMATION ENCLOSED,” and you must enclose a blank Form W-9. The notice itself has to tell the payee that the IRS informed you of a name/TIN mismatch and that they need to provide a certified correct TIN.2Internal Revenue Service. Backup Withholding B Program
If the payee is a foreign person, request the appropriate Form W-8 (such as Form W-8BEN) instead of a W-9.3Internal Revenue Service. About Form W-8 BEN
When the payee returns a completed, certified W-9, update your records for all future information returns. That resolves the issue and no backup withholding is required. Keep the mailing date and the response date on file. That documentation is your primary defense if the IRS questions your compliance later.
When You Must Start 24% Backup Withholding
If a payee doesn’t respond to your First B-Notice, you must begin withholding 24% of all reportable payments to that payee no later than 30 business days after you received the CP2100A.1Internal Revenue Service. Understanding Your CP2100 or CP2100A Notice This obligation sits on you as the payer under IRC Section 3406. If you fail to withhold, you become liable for the tax that should have been collected.4Office of the Law Revision Counsel. 26 USC 3406 – Backup Withholding
Backup withholding applies to non-wage reportable payments: interest, dividends, commissions, rents, and payments to independent contractors reported on Forms 1099.5Internal Revenue Service. Backup Withholding The 24% rate is flat.
Once the payee provides a certified correct TIN, stop withholding no later than 30 calendar days after you receive it. Individuals certify their Social Security Number on a signed W-9; businesses certify their Employer Identification Number the same way.
Second B-Notice: Same Payee, Second Notice Within Three Years
If the same payee appears on a CP2100 or CP2100A a second time within three years, the process changes. You send a Second B-Notice, but you do not include a Form W-9. A W-9 certification is no longer sufficient by itself.2Internal Revenue Service. Backup Withholding B Program
The payee must now get independent validation of their TIN. Individuals contact their local Social Security Administration office and request a Social Security Number Printout, then send you a copy. Businesses and other entities using an EIN must request Letter 147C from the IRS confirming their name and number match.6Internal Revenue Service. Announcement 2010-41 – Social Security Number Validation Following Receipt of Second B Notice
Until you receive that validation, backup withholding at 24% continues on every reportable payment. Telling the payee directly what they need and why usually gets faster results than another form letter.
Depositing and Reporting What You Withhold
The 24% you withhold doesn’t sit in your account. Deposit it with the IRS through the Electronic Federal Tax Payment System (EFTPS) on the deposit schedule that applies to you. Your frequency is based on the total tax liability from your Form 945 two years earlier: over $50,000 generally puts you on a semiweekly schedule, and monthly deposits apply otherwise.
At year-end, report all backup withholding on Form 945, Annual Return of Withheld Federal Income Tax. Form 945 is separate from Form 941, which covers payroll withholding. The general due date is January 31 of the following year.7Internal Revenue Service. Instructions for Form 945 (2025)
You don’t file a corrected information return for the year that triggered the CP2100A, but you must use the corrected TIN on all future filings. Keep the original notice, copies of B-Notices you mailed, return receipts, and completed W-9s or validation documents for at least four years.
What the Penalties Look Like
The financial exposure comes from two directions: information return penalties and backup withholding liability.
Information return penalties under IRC Section 6721 are tiered by how fast you correct the error. For returns due in 2026:8Internal Revenue Service. 20.1.7 Information Return Penalties
- Corrected within 30 days of the due date: $60 per return, up to $683,000 per year (or $239,000 for small businesses with average gross receipts of $5 million or less).
- Corrected after 30 days but by August 1: $130 per return, up to $2,049,000 per year ($683,000 for small businesses).
- Corrected after August 1 or not corrected: $340 per return, up to $4,098,500 per year ($1,366,000 for small businesses).
- Intentional disregard: at least $680 per return, no annual cap.
The backup withholding side can be worse. If you were required to withhold 24% and didn’t, the IRS can assess the full amount you should have withheld, plus penalties and interest on the undeposited tax. On a $100,000 contractor for the year, that’s $24,000 out of your own pocket, since you never actually withheld it from the payee.
Reasonable Cause as a Defense
Penalties under Sections 6721 and 6722 can be waived if you show the failure was due to reasonable cause and not willful neglect. The IRS looks at two things: whether significant mitigating factors existed, and whether you acted in a responsible manner both before and after the failure.9eCFR. 26 CFR 301.6724-1 – Reasonable Cause
Mitigating factors include no prior penalties for the same type of failure and an established compliance history. Those factors alone aren’t enough. You also have to show you acted responsibly: collecting W-9s at the start of each relationship, mailing B-Notices on time, following up with non-responsive payees, and starting backup withholding when required.
The payers who lose reasonable cause arguments are typically the ones who received the notice and did nothing. Payers who ran the process correctly and still had a payee supply a bad TIN are in a much stronger position.
Avoiding the Next One
The most effective prevention is verifying TINs before you file. The IRS runs a free TIN Matching Program that lets authorized payers check name-and-TIN combinations against IRS records before submitting returns. Both interactive and bulk options are available.10Internal Revenue Service. Taxpayer Identification Number (TIN) Matching
To use it, you must be listed on the IRS Payer Account File database and apply through the IRS e-Services portal. The right time to verify is when you onboard a new contractor or vendor. Catching a transposed digit before you file the 1099 is far easier than unwinding a B-Notice months later. Running a bulk check against your full payee list before filing season pays off if you file hundreds of returns.
Beyond TIN Matching, tighten intake. Collect a signed W-9 from every payee before the first payment, not after. Compare the name and TIN on the W-9 against invoices and contracts. Inconsistencies there are the most common source of the mismatches that produce a CP2100A months later.