What is TIN Matching?
TIN Matching is a process that ensures that a payee’s TIN and name align with the IRS database. This process is designed to ensure that correct information is reported before submitting tax filings.
The IRS maintains a database specifically for TIN Matching. When a business or authorized user submits a TIN and corresponding name, the system checks for a match.
Why is it Necessary?
Mistakes in tax reporting can lead to compliance issues. If a business submits an incorrect TIN/name combination, it may receive an IRS B-notice, requiring additional verification. If the error isn’t fixed, the business may have to apply backup withholding, deducting taxes from payments made to the payee.
TIN Matching helps businesses avoid these issues by confirming tax details ahead of time. It also ensures compliance with IRS regulations, streamlines vendor onboarding, and reduces the risk of dealing with fraudulent information. Simply put, it’s a safeguard against tax reporting mistakes that could cost businesses time and money.
Benefits of TIN Matching
It offers several benefits, including:
- Preventing IRS B-notices and penalties
- Speeding up vendor onboarding
- Ensuring tax compliance
- Detecting identity errors before they become problems.
- Improving business efficiency
- Minimize manual verification efforts
How Does TIN Matching Work?
The TIN Matching process starts with a business’s collecting TINs from vendors, independent contractors, or other payees using Form W-9. These TINs can be:
- Employer Identification Numbers (EINs) for businesses
- Individual Taxpayer Identification Numbers (ITINs) for certain individuals
- Social Security Numbers (SSNs) for sole proprietors or individuals
Once collected, the business submits the TINs for verification through the IRS Taxpayer Identification Numbers Matching system. The system then checks if the name/TIN combination matches the IRS database. If there are discrepancies, the business needs to correct the information before filing.