Clients receiving CP-2100A (missing or "wrong" TIN number)

[CBetter]

Hello, my clients are receiving CP-2100A letters from the IRS saying there is a missing or incorrect EIN / TIN on the forms they are submitting. The information in question is coming from the W9 form I provide to my clients. 

Some background: I own a single-member, "disregarded" LLC.  I have a personal EIN number (so I don't need to give out my SSN to clients) and I have an Business EIN number.

Per the IRS'  W9  instructions...

-I entered my name on line 1.
-I entered my business name on line 2.
-I entered my personal EINi n Part 1 because...

...the W9 instructions specifically say, "If you are a single member LLC that is disregarded as an entity separate from its owner, enter the owner's SSN (or EIN if the owner has one). Do not enter the disregarded entity's EIN.

I feel like I am following the IRS's W9 instructions to the letter, does anyone know why the IRS feels there is a mismatch with the EIN / TIN numbers...and what the fix is?   Thanks for your help! 

[GeorgeM777]

Based on what you have stated, it appears that you completed the W-9 correctly.  The W-9 instructions indicate that the EIN must match the name on line 1.  If they match, then you have completed that part of the form correctly.  Moreover, we assume that line 3 is also correct in your case, meaning that you have checked the box for single-member LLC. 

According to IRS guidance regarding CP 2000 letters, those that receive such letters can call the IRS and speak to an agent about the letter.  In this regard, the IRS has stated:

"The IRS provides a phone number on each letter. IRS telephone assistors can explain the letter and what taxpayers need to do to resolve any discrepancies."

IRS explains CP 2000 letters sent to taxpayers when tax return information doesn’t match information...

Perhaps your customers can contact, or re-contact, the IRS and explain to the agents what you have stated, namely that your W-9 is correct as per IRS instructions.  

@CBetter

[CBetter · Accepted solution]

Hi George, yes, I checked the box on line 3 indicating I'm a "single-member LLC."

Thank you for confirming I'm not crazy. And in digging around more, I think I figured this out.

The IRS effectively considers a "single-member LLC" the same as a "sole proprietorship." Meaning, they want to know YOUR name (as in, you, the person) and they couldn't care less about your single-member LLC's business name.

That means, when filling out 1099s, my clients should use MY name (ie, the business OWNER, John Smith) as the "recipient name" and NOT the business/LLC name.

Doing it this way, the "payee / recipient name" and EIN will match on the 1099 (again, assuming the EIN is also for the PERSON and NOT the business/LLC). 

Does the IRS provide clear instructions about this for filling out the 1099? Of course not!

[DianeW777]

Yes, you are correct.  The IRS considers a SMLLC as a disregarded entity and wans the owner to use their own SSN instead of the EIN.  That's essentially what it says in the instructions you included.

W-9 Instructions:

"If you are a single member LLC that is disregarded as an entity separate from its owner, enter the owner's SSN (or EIN if the owner has one). Do not enter the disregarded entity's EIN.

"Enter the owner's name on line 1. The name of the entity entered on line 1 should never be a disregarded entity. The name on line 1 should be the name shown on the income tax return on which the income should be reported."

• In other words, if you were required to have an EIN as a sole proprietor (employees would be the usual reason) then you would use that EIN, but not the EIN of the disregarded entity. If you do not have a separate EIN for you, the sole proprietor, you must use your SSN.

This can cause confusion when wading through the instruction waters.  

[CBetter]

Thanks, Diane. The problem is NOT with the W9 instructions -- I understood and followed those correctly. The problem is how my clients were filling out and submitting their 1099 forms. Because of the lack of detailed instructions, they are using my business name as the "recipient name" and my personal EIN number as the "recipient TIN."  That's a mismatch.  More details are in my previous post.