ITG FAQ #19 Answer-What should I do if I receive a notice from the IRS that my Form 1099 information contains a mismatch or discrepancy?
First, compare the IRS list to your records. Does this list include missing Taxpayer Identification Numbers (TINs)? If so, you should begin backup withholding immediately, if you have not already done so. Be sure to follow the instructions provided in the letter.
You should follow the procedures below as they apply to your situation:
Continue or begin backup withholding immediately. At least three solicitations for a TIN are required: 1) Initially when payment was made; 2) First Annual Solicitation by December 31 of the year payment is made (for 2007 payments this date would be 12-31-07); and 3) Second Annual Solicitation by December 31 of the following year (for 2007 payments this date is 12-31-08).
If the TIN/name combination of the list matches the Form W-9 or other documents in your records, you have 15 business days to send a "B" Notice to the payee. Backup withhold from any reportable payments if the payee does not respond to you within 30 days of the date on the notice. Do not backup withhold if the payee furnishes the required certification. Keep copies of these documents in your files.
If the TIN/name combination on the list does not match with your records, it could be because 1) you put the incorrect information on the return; 2) the information changed after you filed it; or 3) IRS misprinted the information in processing. You should correct and update your records, use the correct TIN/name information for future filing, and make a note of the error in your records.
Detailed information about backup withholding can be found in IRS Publication 1281, A Guide for Missing and Incorrect Names/TINs.