January 2015

Volume 3, Issue 2

Posted on 1/30/2015

How Does the IRS Know Names Do Not Match?


The IRS checks your customer against four different lists for a match. 

  • The DM-1 File -- A file containing all SSNs ever issued by the SSA
  • The EIN-Name Control File -- A file containing all the IRS-assigned EINs
  • The ITIN File -- A file containing all the IRS-assigned ITINs (On DM-1)
  • The ATIN File -- A file containing all the IRS-assigned ATINs (On DM-1)

There are two kinds of errors:  missing or incorrect.   If the error is missing it may be just entry error 123-45-990 which would be missing a number.  Sometimes the customer refuses to give you a number and you can either not open the account or begin back up withholding.  Most institutions will not open without a TIN for a US person.


The IRS will let your institution know if the TIN is missing or incorrect by send the institution a CP2100 or CP2100A.  This is a notice that tells a payer that he or she may be responsible for backup withholding. It is accompanied by a listing of missing, incorrect, and/or not currently issued payee TINs. Large volume filers will receive a CD or DVD data file CP2100, mid-size filers receive a paper CP2100, and small filers receive a paper CP2100A.


Large Filer  -  250 or more error documents;

Mid Size Filer - Between 50 and 249 documents.

Small Filer -  Less than 50 error documents. 


FDIC Issues FIL Encouraging Risk-Based Approach In Assessing Individual Customer Relationships

The FDIC issued FIL-5-2015 to encourage institutions to take a risk-based approach in assessing individual customer relationships rather than declining to provide banking services to entire categories of customers. 

  • The FDIC encourages insured depository institutions to serve their communities and recognizes the importance of services they provide.
  • The FDIC encourages institutions to take a risk-based approach in assessing individual customer relationships rather than declining to provide banking services to entire categories of customers without regard to the risks presented by an individual customer or the bank's ability to manage the risk.
  • Individual customers within broader customer categories present varying degrees of risk.
  • Institutions are expected to assess the risks posed by an individual customer on a case-by-case basis and to implement controls to manage the relationship commensurate with the risks associated with each customer.
To read FIL-5-2015 in its entirety, click here.  


Tools for Building a Complete Risk Assessment

How do you make a comprehensive risk assessment and follow the FDIC recent FILs? Are the other regulators in agreement? The FDIC issued guidance to encourage institutions to take a risk-based approach in assessing individual customer relationships rather than declining to provide banking services to entire categories of customers. Your financial institution's risk assessment for AML/BSA may be the most important tool for prevention of financial crimes and developing a culture of compliance.  What are your institution's risks?  How are you mitigating those risks?  This program is a how-to with spreadsheets and risk-weighting tools to help you build the most comprehensive risk assessment for your institution.   


Join Debbie Crawford for this webinar on February 20 to learn the tools you need for building a complete risk assessment. For more information or to register, click here

Volume 3, Issue 1

Posted on 1/21/2015

Opening Accounts: When Names Do Not Match TINs

Are you opening a new account? Here are four questions you should ask:

  • Is this your correct TIN?
  • Are you subject to back up withholding?
  • Are you exempt?
  • Are you exempt from FATCA? (This is used by foreign financial institutions but may appear on your forms)

Your financial institution has to report interest and dividend payments to the IRS.  If your account holder's TIN is incorrect, then your institution has to go into the B-notice process and may be subject to penalties of $100 per name.


IRS Publication 1281 helps with these definitions:


What is backup withholding?

Persons (payers) making certain payments to payees must withhold and pay to the IRS a specified percentage (28%) of those payments under certain conditions. Payments that may be subject to backup withholding include interest, dividends, rents, royalties, commissions, non-employee compensation, and other payments including broker proceeds and barter exchange transactions, reportable gross proceeds paid to attorneys, and certain payments made by fishing boat operators. Payments that are excluded from backup withholding are real estate transactions, foreclosures and abandonments, cancelled debts, distributions from Archer Medical Savings Accounts (MSAs), long-term care benefits, distributions from any retirement account, distributions from an employee stock ownership plan (ESOP), fish purchases for cash, unemployment compensation, state or local income tax refunds, and qualified tuition program earnings.


What is a Taxpayer Identification Number (TIN)?

A TIN is a Social Security Number (SSN) issued by the Social Security Administration (SSA) or an Employer Identification Number (EIN) issued by the IRS. A TIN can have only nine (9) numbers. It cannot have more or less than nine numbers nor can it have letters. See Question #3 for information on ITINs and ATINs.


What is an Individual Taxpayer Identification Number (ITIN)/Adoption Taxpayer Identification Number (ATIN)?

An ITIN is an individual Taxpayer Identification Number (ITIN) issued by the IRS and may be used as a TIN to meet federal tax obligations only. Resident aliens and nonresident aliens, who are not eligible for SSNs, use ITINs. An ITIN has nine numbers in the same format as an SSN and always begins with the number 9. The fourth and fifth digits are always within the range of 70 through 88. An ATIN is an Adoption Taxpayer Identification Number issued by the IRS and can be used as a TIN. An ATIN is only a temporary taxpayer identification number issued for a child born, and adopted, in the United States. An ATIN contains nine numbers in the same format as an SSN. An ATIN should be requested when an SSN cannot be obtained in time to file your tax return. Once the adoptive parent obtains an SSN for the adopted child, the ATIN becomes obsolete.


Can a payee claim he or she is exempt from backup withholding?

Yes. Payees who may be exempt are listed in the "Instructions for the Requester of Form W-9". They include tax-exempt organizations, government agencies, corporations (for certain payments), and other listed entities.


You can  register with the IRS to make sure the name you enter to open the account matches the TIN.  This has to be for interest reporting purposes.


E- Services provide various electronic and interactive applications. For more information about the e-services provided by the IRS, click here. Payers of income reported on Forms 1099 B, DIV, INT, K, MISC, OID, and/or PATR may be eligible to participate in the TIN Matching program. You can download the TIN Matching Publication, 2108A, by clicking here

Do you have a question or topic that you would like to see addressed in our monthly newsletter? If so, email us and let us know. Send questions and/or topic suggestions to info@bankersecampus.com.