FEIN Matching

[barosser]

Does ATX have FEIN matching prior to e-filing 10-99's? I have a large number to get done and would like to check the validity prior to sending to IRS

[Slappy Tax]

Maybe someone else has the specific answer about ATX, but I'm a little confused by the question. Maybe I just don't understand what you're asking for.

My guess is that you're asking whether it's possible to confirm TINs (SSNs and FEINs) for the purpose of issuing 1099s. The answer is yes, but the only way I know to do it is via the IRS eServices website. You have to be registered with eServices (which you can do online), but it's not an instantaneous registration. The IRS will "check you out" and send you a password by mail.

I long ago lost interest in the details of the eServices procedures (too restrictive, too cumbersome), so I might not have the latest rules. There might be an easier way of doing it, but here is how it works for me. First, you have to register yourself (i.e., yourself as an individual, not your company). Then, once you're in the door, you have to register your company and the companies that you want to prepare the 1099s for. In other words, if Company A is paying me to verify and prepare its 1099s, that company has to show me as an authorized user on its account, and I am restricted to verifying the TINs only for the recipients of those 1099s. In other words, I cannot go onto the website and indicate that I am verifying TINs for 1099s for myself since I'm not the issuer, even though I am the one preparing them. (See what I meant by too restrictive, too cumbersome?)

Once you've jumped through all these hoops, you enter the TINs and recipients' names, and the system gives you instant verification. If the names and numbers don't match, it doesn't tell you why. You have to resolve the errors yourself and resubmit the corrected info for verification.

Next, you mentioned that you want to verify FEINs for 1099s. Typically (although not always), 1099s are issued to individuals via their SSNs. There are exceptions (LLCs choosing to be disregard entities, attorneys, etc.), but in most cases 1099s will bear an SSN, not an FEIN. My point is that if you're planning to issue 1099s to a bunch of FEINs, doublecheck to make sure you're required to issue them and are not issuing them to S-Corps, C-Corps, etc. It's technically not wrong to issue them to corporations. It's just not required.

Compare this whole ordeal with the SSA BSO website which lets you right in to verify SSNs for W2s.

This response is becoming a little tedious, I know, but there is one more point. To verify TINs via IRS eServices or SSNs via SSA BSO, you have to have the payer's written authorization. I haven't found a specific government form for this authorization so I just have my clients sign a statement authorizing me to utilize the government websites for purposes of TIN and/or SSN verifications.

Sorry the response is so long. I guess it really is long considering that I don't know the answer to the question you asked to begin with.

[barosser]

Your response althought lengthy I understand. I have a new client that has never sent 10-99's. They will have several hundred and have become worried that the IRS will issue matching letters with penalties. The Tp has looked at other options instead of haveing me file these. She stated that some programs she was looking at have the ability to check the validity of the number (matching) before sending to the IRS.

I tool registered with E Services early in its existence but at the time found it to mbe mostly useless anf cumbersome for my practice. I might need to look at it again. I do verufy SS # for some clients with the SS Admin.

You spoke of a gerneral form for permission. Where might that be located.

thanks in advance

[Slappy Tax]

Let me do a little research and see if I can get back to you with some tips. In the meantime, someone else might come along here with a good answer.

[Slappy Tax]

I poked around for as long as I have time for, but I came up dry. I could not find any software company that offers TIN verification for 1099s as part of its package. This isn't to say they aren't out there. I just couldn't find them. I'm not really sure how it would be done anyway since you have to have access to the IRS' TIN database to perform such verification, so you're right back to the eServices route anyway.

Here are the options that I see:

(1) Issue the 1099s to the recipients by 1/31/08. If the client has to issue more than 250 1099s, then it must efile the 1096/1099s with the IRS anyway, so that extends your 1096 deadline to 3/31/08. This means that you will have until 3/31/08 to renew your eServices registration and register the client company. You would then be able to perform the TIN verification, make any corrections, and still efile the 1096/1099s by the 3/31 deadline.

(2) Issue the 1099s and efile the 1096/1099s without verifying them. I had one company do this itself about 3 or 4 years ago. It was a title company with about 3,000 1099s, many of them to foreign investors. The company received a nice little bill from the IRS for about $1,500 for all of the mismatched names/TINs that occurred. She provided the IRS with copies of the W-9s that the payees had provided, and the IRS waived the entire penalty without any fuss whatsoever, including those 1099s with clerical errors (such as a mistyped SSN). Once the IRS learned that she was diligent about collecting the information from the payees and hadn't just thrown bad 1099s into the system, it said fine, all is forgiven, go in peace. Of course, it didn't hurt that we advised the IRS that her company had immediately enrolled in eServices and would verify each TIN right up front. The point here is that if the company was diligent in obtaining W-9s from the payees and diligent in filing the 1099s, the IRS will likely waive any penalties for mismatches. But the best plan would be to get the company enrolled in eServices so that its personnel could check these TINs as they come in, rather than leaving a big mess at the end of the year.

Make sure that you're charging enough money for all of this. No matter what, it will be labor-intensive and time-consuming.

If someone else has a better approach that I haven't thought of, please chime in.