If your business files or prepares high-volume 1099s, you have likely encountered an IRS B-Notice firsthand. These notices tend to arrive unexpectedly, sometimes months after filing, and rarely in isolation. A seemingly minor name and TIN discrepancy can quickly escalate into 24% backup withholding, compounding penalties, and extended administrative remediation.
As you prepare 1099s for the 2025 tax year and verify vendor data, the stakes are significantly higher. Even small data errors can create real financial and operational consequences – especially when they trigger B-Notice workflows and backup withholding. From penalties and interest to audits and strained vendor relationships, the true cost of incorrect TINs often emerges long after filing season concludes.
This guide breaks down what IRS B-Notices are, why they occur, and what they mean for your 2025 filings. More importantly, it outlines how you can prevent them before the early-2026 1099 deadlines. For example, Form 1099-NEC is due by January 31, and if that date falls on a weekend/holiday, the deadline moves to the next business day.
What Is an IRS B-Notice?
An IRS B-Notice is a core component of the IRS Backup Withholding Program. It is issued when the IRS identifies a mismatch between the name and Taxpayer Identification Number (TIN) reported on a filed Form 1099 and the information held in its records.
These mismatches are identified through CP2100 or CP2100A notices:
- CP2100 is generally issued for mid-size or large error listings, often when 50 or more incorrect returns are identified.
- CP2100A is generally issued for small error listings, typically involving fewer than 50 incorrect returns.
Once you receive one of these notices, the issue escalates into either a First or Second B-Notice, depending on whether the same TIN error has occurred in prior years. This distinction is critical, as the required response differs significantly.
The IRS typically distributes CP2100 and CP2100A notices twice each year, usually in April and October, based on the previous tax year’s 1099 filings. As a result, errors made while filing 1099s for tax year 2025 (filed in early 2026) may not trigger B-Notices until mid-to-late 2026.
This delayed timing often catches businesses off guard. By the time a B-Notice arrives, payments may already have been issued, records archived, and vendors may be more difficult to engage for data correction.
How TIN Errors Occur
Most TIN mismatches are not caused by negligence but rather by small, preventable issues that accumulate during filing season.
Common causes include manual data entry errors, missing or outdated W-9 forms, and inconsistencies across vendor systems. A contractor may update their business name, a vendor might submit an outdated EIN, or a digit may be mistyped during onboarding. Without validating the vendor information, these discrepancies often go unnoticed until after 1099s are filed.
These issues tend to surface during the most demanding periods of the year, when teams are focused on meeting deadlines rather than maintaining data hygiene. Businesses relying on spreadsheets or disconnected systems are especially vulnerable.
The majority of B-Notices associated with the 2025 filing cycle are preventable through rigorous, pre-submission TIN validation. Early identification and correction are far more cost-effective than post-filing cleanup.
Financial Consequences of B-Notices for 2025 Filings
When a B-Notice is triggered, the impact extends well beyond correcting a single record.
Backup withholding is often the most immediate and visible cost. If a vendor’s TIN is missing or invalid (or the IRS notifies you that the name/TIN combination is incorrect), you may be required to begin 24% backup withholding on certain reportable payments going forward until the issue is corrected.
IRS penalties represent an additional layer of exposure. For returns due in 2026, the penalty can reach $340 per information return, depending on how late the return is filed or corrected. If the IRS determines there was intentional disregard, the penalty is at least $680 per form, with no maximum cap. When multiple vendors are involved, even small error rates can accumulate into significant liabilities.
B-Notice remediation also creates operational drag. Organizations must update vendor records, solicit corrected payee information, and ensure any required backup withholding is properly withheld and deposited. Delays or failures can increase penalty exposure and complicate reconciliation.
Finally, repeated TIN mismatches raise red flags. A pattern of errors tied to 2025 filings can increase audit likelihood and place an organization’s broader information reporting processes under closer scrutiny.
How to Respond to a B-Notice
Once a B-Notice arrives, timing and accuracy become paramount.
With a First B-Notice, you must send the payee the first ‘B’ Notice and Form W-9 within 15 business days after the CP2100/CP2100A notice or the date you received it (whichever is later).
A Second B-Notice applies when the same TIN mismatch occurs within three calendar years. In this situation, validation is required rather than a new Form W-9. The payee must provide official documentation, such as:
- A copy of a Social Security card (For SSNs)
- IRS Letter 147C (for EINs)
- An IRS validation letter (for ITINs/ATINs, as applicable)
If no response is received within 30 business days, backup withholding must begin or continue, as applicable.
Preventing B-Notices Through Accurate TIN Matching
The most effective way to manage B-Notices is to prevent them from being triggered in the first place.
EINsearch offers a proprietary TIN Matching Tool that validates TIN and name combinations in real-time, helping identify mismatches before they reach the IRS. The platform is engineered to handle large vendor lists through batch verification, making it a practical solution for organizations managing hundreds or thousands of payees.
Rather than reactive error correction, the objective is proactive prevention, a critical priority as organizations finalize 1099 data for the 2025 tax year. The platform maintains audit-ready records, providing clear documentation of when and how each TIN was verified.
TIN Compliance Checklist for 2025
As you prepare for the 2025 1099 filing season (January-March 2026), the following proactive steps can significantly reduce compliance risk:
- Validate all vendor TINs in advance using EINsearch
- Collect and verify updated W-9s for all 2025 payees
- Resolve any open TIN issues from CP2100 and CP2100A notices issued earlier in 2025
- Adhere to the 15-business-day window for issuing First or Second B-Notices
- Implement 24% backup withholding immediately if the required documentation is not received
- Centralize TIN compliance workflows using the EINsearch platform to maintain a defensible audit trail
Why EINsearch Is Your Compliance Partner for 2025
1099 compliance is not just about meeting deadlines; it is about ensuring data accuracy before submission. For the 2025 tax year, EINsearch helps businesses reduce risk through real-time validation and batch processing within an encrypted, audit-friendly system.
As you prepare to submit 1099s for tax year 2025, remember that reporting thresholds vary by form and payment type. Form 1099-NEC generally applies to payments of $600 or more, while Form 1099-MISC applies to payments of $600 or more for most categories and $10 or more for royalties. Accurate TIN matching helps avoid 24% backup withholding, reduces exposure to escalating penalties, and eliminates the administrative rework that often follows months after filing.
