Notice 2013-56 - Relief from section 6050W-related penalties for incorrect TIN information for payment card, third-party network transactions 

September 4: The IRS today released an advance copy of Notice 2013-56, providing transitional relief from penalties when a section 6050W filer reports incorrect taxpayer identification number (TIN) information on information returns (i.e., Form 1099-K, Payment Card and Third Party Network Payments) and payee statements filed under section 6050W.

In Notice 2013-56 [PDF 16 KB], the IRS stated that it was aware that payors subject to section 6050W reporting continue to experience greater than usual difficulty in obtaining correct name and TIN information from payees and in resolving name and TIN mismatches.

Penalty relief

Accordingly, Notice 2013-56 provides penalty relief for certain errors on information returns and payee statements required to be filed or furnished in 2013, based on payments made in calendar year 2012, as well as certain returns and statements that are required to be filed or furnished in 2014, based on payments made in calendar year 2013, provided that the section 6050W filer makes a good faith effort to accurately file the appropriate information return and the accompanying payee statement.

The penalty relief does not apply to a payor that erroneously fails to file an information return or payee statement.

CP2100 and CP2100A notices expected in 2014

Today’s notice informs section 6050W filers that IRS notices informing payors that payee name and TIN combinations are incorrect will not be sent based on incorrect name and TIN combinations on Forms 1099-K due before January 1, 2014.

The IRS stated that the first notices (CP2100 and CP2100A) will be sent in late 2014 based on incorrect name and TIN combinations on Form 1099-K filed in 2014 for calendar year 2013 payments.

The CP2100 or CP2100A notices are not necessary to trigger backup withholding. Notice 2013-56 states that payors are to continue to backup withhold on calendar year 2013 payments to payees who failed to provide a TIN or who provided an obviously incorrect TIN.

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