CP2100A Notice: 15-Day B-Notices, Withholding, and Penalties

A CP2100A notice is the IRS telling you, as a payer, that some of the name-and-taxpayer-identification-number combinations you reported on information returns like 1099s don’t match IRS or Social Security Administration records.1Internal Revenue Service. Understanding Your CP2100 or CP2100A Notice It isn’t a bill and it isn’t a penalty. It’s the trigger for the IRS’s “B-Notice” program, and it puts two clocks on you: 15 business days to send a formal notice to each affected payee, and 30 business days to start backup withholding at 24% on anyone who doesn’t respond.

The IRS mails these notices twice a year, in October and again the following April. You’ll get a CP2100A if fewer than 50 of your returns had errors, and a CP2100 if 50 or more did. The instructions and your obligations are the same either way.1Internal Revenue Service. Understanding Your CP2100 or CP2100A Notice

Read the Notice Against Your Own Records First

Before you send anything to a payee, compare the IRS’s list to what you actually have on file. Sometimes the mismatch is on your end: a transposed digit at data entry, a name entered without a hyphen, a business filed under a DBA instead of the legal name. If you can identify and fix the error internally, that account is done. You don’t need to send the payee anything, and you don’t need to file a corrected information return for the year that triggered the notice — just use the correct information on future filings.

The accounts you can’t resolve internally are the ones where your records match what the IRS flagged. Those payees get a B-Notice.

Sending the First B-Notice Within 15 Business Days

The First B-Notice has to go out within 15 business days of the date printed on the CP2100A.2Internal Revenue Service. Backup Withholding B Program A few requirements matter:

  • Mark the outer envelope “IMPORTANT TAX INFORMATION ENCLOSED.”
  • Include a blank Form W-9 for the payee to complete, sign, and return.
  • Tell the payee the IRS notified you of a name/TIN mismatch on an information return filed in their name and that they need to provide a certified correct TIN.

If the payee is a foreign person, request the appropriate Form W-8 instead — Form W-8BEN for a foreign individual, for example.3Internal Revenue Service. About Form W-8 BEN

When a completed, signed W-9 comes back with the correct TIN, update your records for all future information returns. That closes out the payee. Save the dated copy of the B-Notice you sent, proof of mailing, and the returned W-9. If the IRS ever questions your handling, that paper trail is what protects you.

When You Have to Start Backup Withholding

If a payee doesn’t respond to the First B-Notice, you must begin withholding 24% of every reportable payment to that payee no later than 30 business days after you received the CP2100A.1Internal Revenue Service. Understanding Your CP2100 or CP2100A Notice The obligation runs under IRC Section 3406 and sits on you as the payer, not the payee. If you were required to withhold and didn’t, the IRS can come after you for the tax that should have been collected.4Office of the Law Revision Counsel. 26 USC 3406 – Backup Withholding

Backup withholding applies to non-wage reportable payments: interest, dividends, commissions, rents, and payments to independent contractors reported on Forms 1099. The 24% rate is flat.5Internal Revenue Service. Backup Withholding

Once a payee provides a certified correct TIN on a signed W-9, stop withholding no later than 30 calendar days after you receive it.1Internal Revenue Service. Understanding Your CP2100 or CP2100A Notice Individuals give you their SSN; businesses give you their EIN.

When the Same Payee Shows Up a Second Time

If the same payee lands on a CP2100 or CP2100A a second time within three years, the process shifts. You still send a notice — the Second B-Notice — but you do not include a Form W-9. A W-9 certification is no longer good enough on its own.2Internal Revenue Service. Backup Withholding B Program

Now the payee has to get independent validation of the TIN and send it to you:

Until that validation lands in your hands, 24% withholding continues on every reportable payment. This is the point where payees who delay start to feel it, and being direct with them about what’s required tends to move things faster than a form letter alone.

Depositing and Reporting What You Withhold

The 24% you withhold isn’t yours to hold. Deposit it with the IRS through the Electronic Federal Tax Payment System (EFTPS) on the schedule that applies to you — deposit frequency is set by the total tax liability shown on your Form 945 from two years earlier.

At year-end, report all backup withholding on Form 945, Annual Return of Withheld Federal Income Tax. Form 945 is separate from Form 941, which covers payroll withholding. The general due date is January 31 of the following year, with the usual weekend shift.7Internal Revenue Service. Instructions for Form 945 (2025)

Keep the CP2100A itself, copies of every B-Notice you mailed, mailing receipts, returned W-9s, and any SSA printouts or 147C letters for at least four years.

What It Costs to Get This Wrong

There are two separate exposures. The first is information return penalties under IRC Section 6721, tiered by how fast you correct: roughly $60 per return if fixed within 30 days of the original due date, $130 per return if fixed by August 1, and $340 per return if corrected later or not at all, with annual caps that are higher for large filers and lower for small businesses with average gross receipts of $5 million or less. Intentional disregard runs at least $680 per return with no cap.8Internal Revenue Service. 20.1.7 Information Return Penalties

The second is the withholding itself. If you were required to backup withhold and didn’t, the IRS can assess the full amount you should have taken, plus penalties and interest. On a $100,000 contractor, that’s $24,000 out of your own pocket, because you never actually held it back from the payee.

Reasonable Cause If Something Went Wrong

Penalties under Sections 6721 and 6722 can be waived if the failure was due to reasonable cause and not willful neglect. The IRS looks at two things: whether significant mitigating factors existed (no prior penalties for the same type of failure, an established compliance history), and whether you acted in a “responsible manner” before and after the failure.9eCFR. 26 CFR 301.6724-1 – Reasonable Cause

In practice, the payers who win these arguments are the ones who can document every step: W-9s collected at the start of each relationship, B-Notices mailed on time, follow-up with non-responsive payees, backup withholding started when it should have been. The ones who lose are almost always the payers who received a CP2100A and did nothing.

Keeping the Next Notice From Landing

The most effective prevention is verifying TINs before you file. The IRS offers a free TIN Matching Program that lets authorized payers check name-and-TIN combinations against IRS records ahead of filing, with both interactive lookups and bulk verification.10Internal Revenue Service. Taxpayer Identification Number (TIN) Matching To use it, you need to be listed in the IRS Payer Account File database and apply through IRS e-Services.

The right time to verify is when you onboard a new vendor or contractor. Catching a bad digit before the 1099 goes out is far cheaper than unwinding a B-Notice six months later. Running a bulk check against your full payee list before year-end filing is worth the effort when you file in volume. And tighten intake: collect a signed W-9 before the first payment, and compare the name and TIN on it against whatever the payee puts on invoices and contracts. Small inconsistencies at intake are where most CP2100A entries start.