Avoiding 1099 filing issues


It is almost here again. It is hard to think about the upcoming filing season on the heels of Oct. 17, but 1099 filings for 2022 are due in just a few short months. Anyone who has ever assisted clients with these filings know they are wrought with issues when it comes to data collection.

Clients often are not diligent about collecting W-9s from vendors during the year, so when it comes time to report on 1099s things like addresses and taxpayer identification numbers are missing.

Missing or incorrect data on 1099s most likely is going to result in your client receiving a CP2100 or CP2100A notice. These notices are not always easy to resolve and just like any IRS notice, are quite likely to stress your client out upon receipt.

To help avoid issues, the best practice is to remind clients “now” to start collecting W-9s they may not already have. Encourage them to adopt an internal control policy that new vendors don’t receive first payment until a W-9 has been received. Having the data up front makes filing a lot smoother and less likely to have issues.

If clients have not collected W-9 data encourage them to do their best to double check taxpayer identification numbers and EINs. Missing TIN is the most common reason for receiving Notice CP2100 or CP2100A.

The second most common reason for receiving a notice is the incorrect TIN. Identification numbers have to be an exact match to the legal name of the entity filed with the IRS. If a DBA name is used or the client has legally changed the name, a notice may still be received even if the TIN is still correct.

Starting now to remind clients of these compliance steps will help to alleviate stress of filing come January. Start incorporating reminders in newsletters between now and the end of the year. Consider sending clients copies of the W-9 so they know exactly which form to file and also remind them to double check legal names with their vendors. 

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