IRS TIN Matching
Often with a task or project comes the temptation to shortcut it. This is especially true if the task involves an “extra” step to ensure we’ve got it right when we think we already have what we need. The temptation creeps in when that extra step to double check seems a mundane thing that takes time we don’t have.
For example, suppose you are building a deck. Experienced builders warn DIY’ers to “measure twice, cut once.” The point is to ensure you have the dimensions correct before you start cutting the wood because once the wood is cut, you can’t uncut it. And if you do cut wrong, it’ll cost you time and money to replace.
Imagine Mr. Do-it-himself out there in the sun, measuring and cutting. He’s competent. He starts out measuring twice and then cuts. But after a while, it gets tedious. He’s knocking out the work, it’s repetitive, and he thinks it’ll go faster with less tedium if he just measures once and cuts. After all, he hasn’t measured wrong yet.
But sure enough, maybe because the sun has gotten hotter, or because he has begun to get tired, he measures once and cuts. But when he goes to put the piece in place, it doesn’t fit! It’s too short. There’s no way to make that up. The only thing for it is to hop in the truck and make another run to the lumber store. He’s just lost 30 or 40 minutes, plus the cost of a new piece of lumber, all for the sake of avoiding tedium and saving maybe 10 seconds per cut.
The same applies to validation of a vendor TIN. You know you need a TIN before paying a new vendor—otherwise you have to backup withhold. So you have a policy in place and you collect TINs in the vendor onboarding stage. Of course, you hope and assume the vendor-supplied TIN is correct. But there is another step to take to ensure that it is: IRS TIN Matching.
Over a decade ago, the IRS introduced its TIN Match Program. For the first time, there was a way to confirm in advance that you had the right TIN for the payee. By confirming that the TIN and vendor name match, you are assured that you will not get a B-notice, have to pay a fine (which has increased in the ensuing years!), or have to start backup withholding on the vendor.
However, using the TIN Match program may seem to be a tedious step in view of all your other priorities. But if you fail to do it, it could cost you later on.
Following a policy takes discipline, but it is usually worth it. The policy is there for a reason. In this case, it’s compliance—and avoiding B-notices, fines, and backup withholding.
For more information on the IRS TIN Match Program, see IRS Publication 2108A..
Good news: there are services that handle TIN Matching for you, so you can eat your cake and have it too! For example, VendorInfo’s Supplier Compliance tool includes TIN Matching, as well as other important validation steps such as checking the vendor against OFAC’s SDN and other federal proscription lists.
So if TIN tediousness is just too much, enlist VendorInfo to take care of it for you. But confirm those TINs. You’ll be glad you did.
To learn more about vendor verification and compliance click here to request more information or call (678) 335-5735.