Understand IRS CP2100 and CP2100A Notices
A Payer’s Guide to Backup Withholding Notices, B Notices, and Compliance
Each year, the IRS identifies discrepancies between the taxpayer identification numbers (TINs) and payee names reported on information returns—such as Forms 1099—and what appears in its own records. When mismatches are found, the IRS issues CP2100 or CP2100A notices to alert the filing business and trigger the backup withholding process. These notices, often called “B notices,” are a cornerstone of the IRS Backup Withholding “B” Program, and any business that files 1099s should understand how they work, when to expect them, and what actions are required upon receipt.
What Are CP2100 and CP2100A Notices?
A CP2100 or CP2100A notice is the IRS’s formal notification to a payer—typically a business, bank, or financial institution—that one or more information returns they filed contain missing, incorrect, or unverifiable TINs. Specifically, the IRS uses these notices when a payee’s name and TIN combination on a filed return does not match the Social Security Administration (SSA) or IRS database records.
The two versions differ only in the volume of errors identified:
• CP2100 is issued when 50 or more information returns are found to have errors. Mid-size filers (50–249 errors) receive a paper listing; large filers (250 or more errors) receive their listing on a CD or DVD.
• CP2100A is issued when fewer than 50 information returns contain errors. These smaller filers receive a paper notice with an attached listing.
Despite the different names and delivery formats, the content of the notice and the required response steps are identical for both versions. The notices identify specific payee accounts flagged for missing TINs, obviously incorrect TINs (not 9 digits or containing non-numeric characters), or name/TIN combinations that do not match IRS records.
Which Tax Forms Are Covered?
Not all information returns are subject to backup withholding under this program. The forms covered include:
• Form 1099-B (Proceeds from Broker and Barter Exchange Transactions)
• Form 1099-DIV (Dividends and Distributions)
• Form 1099-INT (Interest Income)
• Form 1099-K (Payment Card and Third-Party Network Transactions)
• Form 1099-MISC (Miscellaneous Income)
• Form 1099-NEC (Nonemployee Compensation)
• Form 1099-OID (Original Issue Discount)
• Form 1099-PATR (Taxable Distributions Received from Cooperatives)
• Form W-2G (Certain Gambling Winnings)
Filers of forms that do not contain federal withholding boxes may, in some circumstances, receive a penalty Notice 972CG without first receiving a CP2100 or CP2100A notice.
When Will You Receive These Notices?
The IRS issues CP2100 and CP2100A notices on a twice-yearly schedule, covering different waves of filed information returns:
The April Mailing — What Payers Receive in Spring
The April mailing is the second of the two annual distributions. It covers information returns filed for the prior tax year that were submitted closer to the extended filing deadline. For example, returns filed in late winter or early spring may appear in the April batch rather than the October mailing.
This spring mailing is particularly important for payers who may have missed the October notices or who submitted corrections and amendments after the initial filing period. The April CP2100 or CP2100A notice provides a second opportunity for the IRS to flag errors and for payers to initiate corrective action before penalties accumulate further.
📅 April Notice — Key Points for Payers
• Covers returns filed for the prior tax year, typically those submitted near the extended deadline.
• Represents the second and final B notice mailing of the annual cycle.
• Triggers the same 15-business-day window to issue B notices to affected payees.
• Payers who already responded to an October notice for the same payee may owe a second solicitation if the TIN is still unresolved.
• Receiving a notice in April for an account also flagged in October within the past three years triggers a Second B Notice obligation.
The October Mailing — The Initial Annual Wave
The October (and sometimes September) mailing is the first of the two annual distributions. It covers information returns filed in the early part of the calendar year—typically those submitted by the standard January 31 or February 28/March 15 deadlines.
For most businesses that file their 1099s on time, the October notice is the first indication that TIN or name discrepancies exist on those returns. Acting promptly on the October notice is essential to avoiding escalating penalties and ensuring backup withholding obligations are met before year-end.
📅 October Notice — Key Points for Payers
• Covers information returns filed earlier in the calendar year (standard filing deadlines).
• Represents the first B notice mailing of the annual cycle.
• Requires prompt action before year-end to avoid compounding compliance issues.
• Sets the three-year clock for determining whether a future notice on the same payee triggers a Second B Notice.
What to Do When You Receive a CP2100 or CP2100A Notice
Upon receipt, payers must follow a well-defined sequence of steps. Failing to act—or acting too slowly—can result in liability for uncollected backup withholding and significant penalties under IRC Section 6721.
Step 1: Compare the Notice to Your Records
The notice includes a listing of payee accounts with identified TIN issues. Compare each entry against your internal records. There are two possible outcomes:
• The notice matches your records — This means the TIN or name you have on file is the same incorrect one you submitted to the IRS. Proceed to send the appropriate B notice to the payee.
• The notice does not match your records — If you have a different, correct TIN on file that was not included on the return, correct your records and correct the information return with the IRS. No B notice to the payee is required in this case.
Step 2: Send the Appropriate “B Notice” to the Payee
If the notice matches your records, you must send the affected payee a B notice within 15 business days of the date on the CP2100/CP2100A notice (or the date you received it, whichever is later). The envelope must be clearly marked “Important Tax Information Enclosed” or “Important Tax Return Document Enclosed.”
There are two types of B notices, and it is the payer’s responsibility to determine which applies:
• First B Notice — Used the first time a payee appears on a CP2100 or CP2100A listing. The payer must send the First B Notice along with a blank Form W-9 (or acceptable substitute), requesting the payee certify their correct name and TIN.
• Second B Notice — Required when the same payee account appears on a CP2100 or CP2100A listing a second time within a three-year period. The payer must send the Second B Notice, and this time a Form W-9 is not sufficient. The payee must obtain a copy of their Social Security card (if an individual) or a Letter 147C from the IRS confirming the name and EIN are correct.
The notice itself does not indicate whether it is a first or second notification—payers must track this themselves using their own records.
Step 3: Begin Backup Withholding When Required
Backup withholding at the current rate of 24% must be initiated under the following circumstances:
• Missing TINs — Begin backup withholding immediately if the payee has not provided a TIN, and continue until a valid TIN is received.
• Obviously incorrect TINs — Withhold immediately on future payments.
• Payee non-response to First B Notice — If the payee fails to return the Form W-9 within 30 business days of receiving the B notice, backup withholding must begin no later than 30 business days after you sent the B notice.
• Payee non-response to Second B Notice — Backup withholding must begin no later than 30 calendar days after the payee receives the Second B Notice, and continues until the payee provides official TIN verification.
Once a valid TIN is received from the payee, backup withholding must be stopped within 30 calendar days. Backup withholding collected must be deposited and reported on Form 945, Annual Return of Withheld Federal Income Tax, using the same name and EIN used on the information returns.
The Two-in-Three-Year Rule
A critical compliance concept tied to these notices is the “two-in-three-year rule.” If the same payee account appears on a CP2100 or CP2100A notice a second time within a three-calendar-year period, the payer is obligated to issue a Second B Notice rather than a First B Notice.
This rule applies regardless of which tax year the notices cover, and it applies whether the second notice arrives in October or April. Payers who receive April notices must review their records carefully, as an April notice for an account first flagged in a prior October mailing could trigger the Second B Notice obligation if the events fall within the three-year window.
If a B notice is returned as undeliverable, the payer must begin backup withholding and attempt to locate the correct address. The undelivered notice should be retained for at least three years to document compliance efforts.
What Comes Next: Notice 972CG
If TIN errors are not resolved and backup withholding obligations are not met, the IRS will eventually issue Notice 972CG, known as a “P notice” or Notice of Proposed Civil Penalty. This is a separate and more serious notice that proposes penalties under IRC Section 6721 for filing information returns with missing or incorrect TINs.
Notice 972CG is typically issued approximately 18 months after the original information return filing deadline. Current penalties range from $50 to $560 per return (amounts are periodically adjusted for inflation), with a maximum penalty for large businesses of $3,392,000 and $1,130,500 for small businesses. There is no cap on penalties attributable to intentional disregard.
Payers have 45 days from receipt of Notice 972CG to respond. A documented history of good-faith compliance efforts—including timely B notices, W-9 solicitations, and backup withholding—can support a request for penalty abatement on the grounds of “reasonable cause.” If the payer does not respond or pay, the IRS will issue Notice CP15 or CP215, which is a final bill including accrued interest.
How to Proactively Reduce Your Risk
The best approach to CP2100 and CP2100A notices is to minimize the errors that trigger them in the first place. Best practices include:
• TIN Matching before filing — The IRS offers both Interactive TIN Matching (up to 25 name/TIN combinations in real time) and Bulk TIN Matching (up to 100,000 combinations within 24 hours). Running matches before submitting 1099s is the most effective preventive measure.
• Collect Form W-9 before payment — Require all new vendors and contractors to complete a Form W-9 before receiving any payments. This establishes the correct TIN at the outset.
• Verify information format — Ensure TINs are nine digits with no letters or special characters. Formatting errors alone can trigger a mismatch.
• Keep your mailing address current with the IRS — CP2100 notices are delivered by mail. If your business address has changed and the IRS doesn’t have your current address, you may miss the notice entirely—and the compliance deadlines still apply.
• Track notice history by payee — Maintaining an organized log of which payees have been listed on prior CP2100 or CP2100A notices is essential for determining whether a First or Second B Notice is required.
Quick Reference Summary
Topic
Key Information
CP2100 vs. CP2100A
CP2100: 50+ error returns. CP2100A: fewer than 50 error returns. Same instructions apply to both.
Mailing Schedule
Twice yearly: October/September (first wave) and April (second wave).
April Notice Covers
Returns filed for the prior tax year, typically those near the extended deadline.
October Notice Covers
Returns filed earlier in the year, typically at standard deadlines.
B Notice Deadline
Send B notice to payee within 15 business days of the notice date.
Backup Withholding Rate
24% of reportable payments to non-compliant payees.
Start Withholding
Immediately for missing/obviously incorrect TINs; within 30 business days if payee ignores First B Notice.
Stop Withholding
Within 30 calendar days of receiving valid TIN from payee.
Second B Notice Trigger
Same payee listed on two CP2100/CP2100A notices within a 3-year period.
Penalty Notice (972CG)
Issued ~18 months after original filing deadline. Payer has 45 days to respond.
Penalty Range
$50–$560 per return; max $3,392,000 (large filers) / $1,130,500 (small filers).
Contact the IRS
866-455-7438 (toll-free), Mon–Fri 8:30 AM–4:30 PM ET.
This article is for informational purposes only and does not constitute tax or legal advice. Consult a qualified CPA, tax attorney, or other tax professional for guidance specific to your situation. Key references: IRS Publication 1281 (Backup Withholding on Missing and Incorrect Name/TINs); IRS Publication 1586 (Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs); IRS Backup Withholding “B” Program (IRS.gov).
