IRS notice guide
IRS CP2100 and the B notice: what your business must do
A CP2100 or CP2100A notice means at least one Form 1099 you filed carried a payee name and taxpayer identification number (TIN) that the IRS could not match. It is not a bill and not a penalty. It starts a clock: compare the enclosed list to your records, mail the right B Notice to each affected payee within 15 business days, and begin 24% backup withholding on anyone who does not respond in time. You do not answer the IRS about the notice itself; what you withhold is reported and deposited on Form 945.
CP2100 in brief
- CP2100 and CP2100A carry the same instructions. The IRS says CP2100A goes to payers with fewer than 50 mismatched returns and CP2100 to payers with 50 or more.
- Publication 1281 gives you 15 business days from the notice date or the date you received it, whichever is later, to mail a B Notice to each payee whose listed name and TIN match what is in your records.
- Begin 24% backup withholding no later than 30 business days after you received the notice on any payee who has not returned a signed Form W-9. For a missing or obviously wrong TIN, withhold immediately.
- A payee account listed twice within three calendar years gets a Second B Notice with no W-9. The payee must produce a Social Security card copy or IRS Letter 147C instead.
- You do not write to the IRS, do not send it the W-9s, and do not file corrected 1099s unless a dollar amount changes. Keep a per-account log for three years.
Notice CP2100 or CP2100A at a glance
- What it is
- A notice to a payer that one or more information returns it filed (Forms 1099 and W-2G) carried a payee name and TIN the IRS could not match, with a listing of the failed accounts. It starts the Backup Withholding B Program; it is not a bill.
- Why it was sent
- The IRS matched your filed 1099s against SSA and IRS records and found TINs that are missing, do not belong to the name shown, or were never issued. CP2100A goes to payers with fewer than 50 such returns; CP2100 to payers with 50 or more.
- Who receives it
- The business that filed the information returns as payer, under its EIN. Contractors and other payees do not receive CP2100; they receive the B Notice you send.
- Tax type involved
- Backup withholding under IRC 3406 on reportable payments (contractor pay, rents, interest, dividends and similar), reported on Form 945, and the related information-return rules for Forms 1099.
- Deadline
- There is no reply-to-IRS deadline; nothing about the notice itself is sent to the IRS. Publication 1281 sets the clocks: mail a B Notice to each affected payee within 15 business days of the notice date or the date you received it, whichever is later, and begin 24% backup withholding no later than 30 business days after that date on any payee who has not responded. Missing or obviously wrong TINs require immediate withholding.
- If it is ignored
- The unwithheld 24% on every later payment to a listed payee becomes your liability, reportable and depositable on Form 945. Each return filed with a missing or incorrect TIN can also draw a per-return penalty proposed on Notice 972CG, and a reasonable-cause response rests on proving you made the required solicitation, which the B Notice is.
What it is, why it was sent, and how serious it is
The IRS matches the Forms 1099 and W-2G you file against Social Security Administration and IRS records. When a payee's name and TIN do not match, or the TIN is missing or was never issued, the payer gets a notice and a listing of the failed accounts; the IRS's own description is that the payee's name and TIN on your information return is missing or does not match its records. It starts the Backup Withholding B Program under Internal Revenue Code section 3406 and Treasury Regulation 31.3406(d)-5. The B Program page says CP2100 goes to payers with 50 or more returns that have errors and CP2100A to payers with fewer than 50, so a small business with a handful of contractor 1099-NECs gets a paper CP2100A. The IRS issues them twice a year, in October and the following April.
A mismatch can be a data problem rather than fraud. Publication 1281 explains what the matching checks: a TIN must be exactly nine digits, and the name on the first name line must be the name that number belongs to. A sole proprietor's 1099 may show only the business name while the SSN belongs to the individual; a contractor's LLC may have supplied an EIN while the payer entered the owner's name. On its own the notice costs nothing. The exposure comes from doing nothing. Once the IRS has notified you that a TIN is incorrect, section 3406 treats backup withholding like wage withholding, so the 24% you fail to withhold on later payments becomes your liability, reported and deposited on Form 945. The second exposure is the per-return penalty for a missing or incorrect TIN, proposed separately on a Notice 972CG. The IRS penalty page says reasonable-cause relief requires showing you acted responsibly before and after the failure, and Pub 1281 says the B Notice is the solicitation that relief depends on.
The deadlines, as the IRS states them
| Action | Clock | Measured from |
|---|---|---|
| Mail the First or Second B Notice | Within 15 business days | The IRS notice date or the date you received it, whichever is later |
| Begin withholding on a missing or obviously wrong TIN | Immediately | The day you discover it |
| Begin withholding when a First B Notice goes unanswered | No later than 30 business days | The IRS notice date or receipt, whichever is later, not the date you mailed the B Notice |
| Begin withholding when a Second B Notice goes unanswered | By the 30th business day | The date of the Second B Notice itself |
| Stop withholding once a W-9 or validation arrives | Within 30 calendar days | Receipt of the signed W-9, Social Security card copy or Letter 147C |
| Track the account for the two-in-three-years rule | Three years | The first IRS notice that listed the account |
What to gather, then how to work the listing
CP2100 working file
- The notice, every page of the listing, the envelope, and the date you received it
- The Form 1099 as filed for each listed account, and the transmitter control code (TCC) if a third party filed for you; Pub 1281 says the TCC on the notice may be theirs
- The Form W-9 on file for each listed payee, with its date and signature
- Prior CP2100 notices and your B Notice log from the last three calendar years
Working the CP2100 listing
- Compare before you mail.Compare the listing with your records first; what you owe each payee depends on which pile it lands in. Pub 1281 says the list may not reflect corrections you already made; if you know an account was fixed, do not send a B Notice.
- Missing or obviously wrong TIN.Begin backup withholding immediately and continue until a TIN arrives. Do not send a B Notice; make the annual solicitations Pub 1281 describes instead, generally by December 31 of the year the account opened and again the following year. Do not borrow the 60-day awaiting-TIN grace period: Pub 1281 limits it to interest, dividends and certain readily tradable instruments. Nonemployee compensation is withheld immediately, even if the contractor has applied for a number.
- Listing disagrees with your records.If you keyed it wrong, the payee updated you after filing, or the IRS misprinted it, correct your own records and use the right data next year. No B Notice, and no correction to the IRS.
- Listing agrees, first time in three calendar years: First B Notice.Mail the First B Notice text from Pub 1281, a blank Form W-9 and an optional reply envelope within 15 business days. The outer envelope must be marked "IMPORTANT TAX INFORMATION ENCLOSED" or "IMPORTANT TAX RETURN DOCUMENT ENCLOSED," and the notice must show the date, account number and 24% rate. A signed W-9 stops or prevents withholding even if it repeats the same information; Pub 1281, Question 25, says keep it on file and do not withhold. A phone call does not count: the name and TIN may not be solicited by telephone.
- Listing agrees, second time within three calendar years: Second B Notice.Mail the Second B Notice text with no W-9, because a W-9 no longer stops withholding. An individual must send a copy of a Social Security card, which Pub 1281 accepts only if the name and SSN differ from what was on the Second B Notice or the card is dated within the six months before it. An EIN holder must obtain IRS Letter 147C validating the name and number. Allow 30 business days from the date of your Second B Notice, then withhold on anyone who has not produced the validation. Pub 1281, Question 17: no Second B Notice is owed if the second CP2100 arrives in the same calendar year as the first, or if both relate to the same payee account for the same calendar year.
- Close the loop inside your business.When a W-9 or validation arrives, update your vendor master and stop withholding within 30 calendar days. Do not file a corrected 1099 for the name or TIN alone; Pub 1281 requires a correction only if a dollar amount also changes. Amounts you withheld are reported on Form 945 and deposited on the schedule in the Form 945 instructions and Publication 15, the guide behind payroll tax deposits. The withheld tax goes in the federal income tax withheld box of the payee's 1099; the IRS backup withholding page tells payees to claim it on their return.
- Log it, because the IRS will not.Pub 1281, Question 21: the notice does not say whether it is a first or second notification; the regulations make the payer responsible for tracking. Record the account, notice date, receipt date, mailing date, response, and withholding start and stop dates, and keep it three years from the first notice. If you no longer pay the payee, Pub 1281 says send the B Notice anyway and note the account. That log is what a reasonable-cause response to a 972CG is built from.
The process weakness a CP2100 reveals
| Layer | What it requires | Where it comes from |
|---|---|---|
| Legal requirement | Withhold 24% when a payee fails to furnish a TIN or the IRS notifies you the TIN is incorrect; send the B Notice within 15 business days; report and deposit what you withhold | IRC 3406(a)(1); Treas. Reg. 31.3406(d)-5; Form 945 |
| Substantiation expectation | Be able to show the initial and annual TIN solicitations and the payee's certification; reasonable-cause relief from the per-return penalty turns on this | Pub 1281; Pub 1586; the information-return penalty rules |
| Defensibility control | Collect a signed W-9 before the first payment, not at year end; run names and TINs through IRS TIN Matching before filing; keep a dated B Notice log per account | Prudent practice, not statute; it is what keeps the notice from arriving |
A CP2100 is the IRS telling you, months after the return was filed, that contractor onboarding let bad data through. The first control is sequencing: a W-9 requested before the first check is free, while a W-9 chased in January from a contractor who has moved on is a missing TIN and a withholding obligation you can no longer satisfy. Make the W-9 a condition of vendor setup and check the name line: Pub 1281 says a sole proprietor lists the individual name first and a partnership, corporation or non-disregarded LLC uses its business EIN. Worker classification comes before any of this, because a misclassified worker's 1099 is wrong regardless of the TIN. The second control is verification before filing. The IRS TIN Matching service lets a payer or its authorized agent validate name and TIN combinations before submitting information returns through IRS e-Services; eligibility is tied to the IRS Payer Account File, built from Forms 1099 filed within the last two years. Commercial 1099 software often sells TIN checking as a feature; the service underneath is the IRS's own. The third control is memory: the two-in-three-years rule only works if the log exists. The law is satisfied when you withhold; the business is defensible only when it can prove the process.
Common questions
I am a contractor and my client sent me a B Notice. What do I do?
Your client's CP2100 listed your name and number, and the law makes them withhold 24% of your pay if you do not respond. For a First B Notice, return the enclosed Form W-9 with your own name on line 1 (business or DBA name on line 2) and the matching SSN, or your LLC or corporation's legal name with its EIN. For a Second B Notice a W-9 is not enough: an individual sends a copy of a Social Security card; an EIN holder requests Letter 147C from the IRS. Tax already withheld is shown on your Form 1099 and credited on your income tax return.
When should I involve a CPA, EA or attorney?
A short CP2100A list may be manageable from the notice and Publication 1281 steps. Bring in an enrolled agent or CPA when withholding will touch many payees, when it should have started months ago and a Form 945 liability must be computed, when a 972CG has already arrived, or when the mismatches suggest workers are really employees. Consult a tax attorney if intentional disregard is alleged or an employment-tax examination is open.
What to gather now
- The notice, the full listing, the envelope, and the date you received it
- The filed Form 1099 and the W-9 on file for every listed account
- Your B Notice log and prior CP2100 notices from the last three calendar years
- Payment history for each listed payee through today
- The First and Second B Notice text and a current Form W-9 from Publication 1281
What to do now
- Compare each listed account with your records; separate missing TINs, listings that disagree with your records, and listings that agree
- Start withholding immediately on missing or obviously wrong TINs
- Mail the correct B Notice within 15 business days in an envelope marked "IMPORTANT TAX INFORMATION ENCLOSED" or "IMPORTANT TAX RETURN DOCUMENT ENCLOSED"
- Calendar the 30-business-day withholding date and set up Form 945 reporting if withholding will be needed
- Record every date and response in a per-account log you keep for three years
Bring in an EA or CPA when the list is long, when you discover withholding should have started months ago and a Form 945 liability must be computed, when a Notice 972CG has already arrived, or when the mismatches suggest workers are misclassified as contractors. Consult a tax attorney if intentional disregard is alleged or an employment-tax examination is open.
Where CompDefend fits — and where it does not
What CompDefend does
- Scores your contractor-reporting domain in the free assessment: whether workers treated as contractors were evaluated on how the relationship really operates, whether a Form W-9 or other TIN documentation is on file for each reportable payee, whether required 1099s were filed, whether backup withholding was applied where a TIN was missing, and whether the returns reconcile to your books. It is one domain of your Federal Tax Defensibility Index, a defensibility measure, not an audit prediction.
- Names the weakness a CP2100 points to and what a stronger onboarding and filing process looks like, so next January's filings do not repeat it.
- Separately, and not for this notice, monitors supported federal business-account activity weekly through CompDefend Radar under a Form 8821: new balances, penalties and examination indicators on your Form 941, 940 and 1120-S accounts, read from the account each week. The IRS letter still controls any deadline.
- Explains, in plain language, which of your obligations are law, which are IRS substantiation expectations, and which are prudent controls.
What CompDefend does not do
- Monitor CP2100 notices, backup withholding, Form 945 or information-return penalty accounts. These are outside CompDefend Radar's current scope, which covers Forms 1120-S, 941 and 940 for domestic business filers under one EIN.
- Send B Notices, verify TINs, prepare or file Forms 1099 or 945, or act as your information-return transmitter.
- Represent you before the IRS or respond to a notice on your behalf; Form 8821 permits reading tax information only.
- Predict whether a 972CG penalty will follow, or promise any penalty-relief outcome.
See where your business stands
A CP2100 can expose an onboarding or pre-filing verification gap. Once the B Notices are out, the free assessment scores that process alongside your filings, payroll and owner compensation and names the domains that are weakest.
Primary sources
- IRS — Understanding your CP2100 or CP2100A notice
- IRS — Backup Withholding "B" Program
- IRS — Publication 1281, Backup Withholding for Missing and Incorrect Name/TIN(s) (Rev. 12-2023)
- IRS — Taxpayer Identification Number (TIN) Matching
- IRS — Backup withholding
- IRS — Information return penalties (Notice 972CG)
- IRS — About Form W-9
- 26 CFR 31.3406(d)-5 — Backup withholding when the IRS notifies the payor of an incorrect TIN
- 26 U.S.C. 3406 — Backup withholding