How To Know If A TIN ID Is Legit Or Not?

A simple guide to know if a TIN ID is legit and things to consider when validating a TIN.

When it comes to tax reporting, one important piece of information that all payers and payees need to be aware of is the Taxpayer Identification Number, more commonly known as TIN. It forms the backbone of tax reporting. If you’re a business owner, you would use TIN matching to validate the identities of your vendors, employees, and other payees. And if you’re a self-employed individual in the gig economy, you would use TIN matching to validate the identity of the entity that is requesting to work with you (or your entity).

Regardless of the use case, Taxpayer identification number (TIN) matching is one of the most important tools to establish tax compliance because it allows you to validate the real identity of the entity or individual.

And today, we will be discussing the simple practice of TIN matching, which allows us to check if a TIN ID is legit or not.

So, let’s get to it.

What is a TIN?

TIN is a common abbreviation for Taxpayer Identification Number. It’s a unique combination of letters and numbers assigned to individuals and entities for the purpose of identification. While an individual has a social security number for the purpose of identification, an entity will have a TIN.

A TIN is a very broad terminology and it comes in a variety of types. The different types of TINs depend on the type of taxpayer: 

• Social Security Number (SSN) for individual taxpayers. 
• Employer Identification Number (EIN) for business entities, trusts, and estates.  
• Individual Taxpayer Identification Number (ITIN) for individuals who are not eligible for an SSN like non-resident and resident aliens, their spouses, and even the dependents. 
• Preparer Tax Identification Number (PTIN) for paid tax return preparers 
• Taxpayer Identification Number for Pending U.S. Adoptions (ATIN) for to-be adopted children who do not have an SSN (temporary) 

Regardless of the varied names, a TIN’s functionality is fundamental to its self-explanatory name – identification. It allows you to identify an entity or an individual per the corresponding identification number.

Why do you need it for Tax Reporting?

The IRS uses TINs to connect income, filings, and tax responsibilities of both individual taxpayers and entities to ensure proper compliance with tax laws. You need TINs to issue 1099, 1098, W2 forms, and others. The IRS requires TIN and the name of the entity or business to match what they have in their records. Even a small error can cause a mismatch and lead to a number of issues including rejected forms, invalid TIN penalties, and CP2100/CP2100A mismatch notices.

If you are the payer who filed the tax form with incorrect information, the IRS may issue a notice, and you will be responsible for correcting it. 

If you do not conduct an IRS TIN check for businesses, you are opening yourself and your payee up to penalties from $60 per return up to $660 for intentional disregard, a 24% backup withholding, and notices. So, what’s the solution? TIN Matching!!!!

What is TIN Matching

At the time of TIN registration, the IRS obtains your legal name per the records of the social security administration and assigns a unique identification number called ‘TIN’. This is the official record that the IRS has to identify and track your income, tax filings, and related regulatory activity.

This TIN and legal name are used for identity validation by third parties.

For example, if you’re a self-employed individual and a local business wants to hire you for a pre-defined term, the hiring entity will verify your TIN and legal name per the IRS records to check if the provided details match the IRS records. If the details match the official records, it’s a TIN match.

This process of obtaining TINs, validating the information against the real-time records of the IRS is known as TIN matching.

How to Match a TIN

Previously, businesses had to wait for hours before they could see the TIN match results for the searched TIN queries. However, times have evolved and so did technology. Tax1099 brings to you the fastest way to check and verify a TIN in just a few seconds.

We recommend checking your TINs with Tax1099’s real-time TIN matching tool – a super fast way to check TINs in 30 seconds or less.

Why do we recommend Tax1099’s real-time TIN matching tool?

• Faster turnaround time (30 seconds or less)
• Real-time TIN match results
• TINs are checked against the source data list (IRS).
• Check 100,000+ TINs in a minute (no more waiting!)
• Auto-generated TIN reports for mismatch segmentation.
• W-9 collection is integrated in the same platform that helps validate payee-provided TINs in a single workflow.
• IRS authorized e-file provider with SOC 2 compliance controls. 

How to know if a TIN ID is Legit

When searching for a TIN, you may come across a variety of alerts or notifications from the TIN search engine. Be it IRS or Tax1099, it is important to understand and consider the following possibilities.

• TIN Match = the entered TIN + legal name match the TIN + legal name records of the IRS
• Invalid TIN = the entered TIN + legal name do not exist in the IRS records
• Incorrect TIN = the provided TIN + legal name are entered incorrectly. The records exist but the details are not accurate enough to give a result.

To prevent the above incorrect and invalid scenarios, we recommend the following prior to TIN Match:

Collect a W-9 Form: Get a signed Form W-9 (or an acceptable substitute) from every payee to check for the legal name and TIN directly from the source (payee).

Check the Legal Name: Make sure the individual or entity name is the legal name, not a nickname or a DBA (“Doing Business As”).

Now all you need to do is run TIN Verification. Use the IRS e-Services TIN Matching program or Tax1099’s bulk TIN verification for payers to check if the TIN matches the IRS database. Additionally, keep the documentation. Save all TIN check results and W-9 TIN validation forms to demonstrate due diligence in case of an IRS audit or dispute.

You can prevent such errors in the TIN match process by automating your TIN match with Tax1099’s API and bulk TIN match services. Your bulk data will be imported directly to our powerful platform to prevent errors that usually occur in manual data entry. The TINs and the legal name details are then validated against the real-time data lists of the IRS.

TIN Match Results: What Each Result Means? 

If you are doing an IRS TIN check for businesses using a TIN matching IRS tool, you’ll be shown three possible results:  

• TIN Match: The TIN and name combination matches IRS databases. 

• Invalid TIN: The TIN does not exist in IRS records or is not currently issued. In this case, you’ll need to request the payee to send an updated W-9. 

• Incorrect TIN: The TIN exists but does not match the name. Re-check the information with the payee to correct it. 

TIN Errors Every Payer Should Avoid 

Best Practices for Payers to Stay Compliant  

• Start collecting W-9 forms at onboarding and always before making any payments. 

• Do not delay verifying TINs with IRS database using TIN Match feature the moment you receive it. 

• Avoid manual checks by using automated bulk TIN checks by Tax1099 for large payee lists. 

• Keep secure digital records of W-9 forms, evidence that you conducted TIN Match, B-notices send by the IRS for at least 3 to 4 years. 

• Keep a track of your B-notices for at least 3 years to apply the “two in three years” rule. 

• Check payee data every year to check for any updates due to change in business structure, legal name, or EIN. 

FAQs 

1. What’s the easiest way to know if a TIN is legit? 

Ans: The easiest way to verify if a TIN is legit or not is to use the IRS TIN Matching program or use Tax1099’s bulk TIN Match feature to check if the TIN and name match IRS databases. 

2. Do payers always need a W-9? 

Ans: Yes, as a payer, you must request and collect W-9 from all the payees you are filing for to stay compliant with 1099 filing and backup withholding rules. 

3. What if the TIN doesn’t match IRS records? 

Ans: If TIN doesn’t match IRS records, you need to request an updated and corrected W-9 from the payee and verify again before filing.  

4. Can a payer file if a TIN is missing? 

Ans: Yes, a payer can still file even if a TIN is missing. At the same, they should begin the backup withholding process as well as follow the TIN solicitation rules.   

5. Do corporations require TIN verification? 

Ans: Most payments to corporations are not reportable, but there are exceptions where you still need a valid TIN such as certain 1099-K reportable payments, medical and health care payments, broker/barter transactions, etc. 

6. Is TIN verification required if payments are under $600?

Ans: It depends on the specific form and reporting threshold. Most 1099 types use $600 as their minimum reporting threshold, but there are some forms which have different thresholds like 1099-INT. Plus, for backup withholding there is no minimum amount.  

Learn More About Bulk TIN Match |  Learn More About Tax1099 API