IRS CP 2100 and B Notice Explained: How to Respond and Protect Your Business
Introduction
Receiving a letter from the IRS can be stressful, especially when it says “CP 2100 Notice” or “B Notice.”
Don’t panic — this notice does not mean you are being audited or owe money.
It simply tells you that a name and taxpayer identification number (TIN) on one or more of your Form 1099 filings does not match IRS or Social Security records.
If you issue Form 1099s to vendors or contractors, you must act quickly and correctly after receiving a CP 2100 Notice to avoid backup withholding (24% tax withholding) and possible penalties.
What Is an IRS CP 2100 Notice?
A CP 2100 Notice (or CP 2100A for smaller filers) is a letter from the IRS sent to payers when the name and TIN on a Form 1099 do not match official IRS records.
Common Reasons for a Mismatch
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The vendor entered the wrong TIN on Form W-9.
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The business name changed, but the EIN did not.
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A typo occurred when submitting the form.
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An outdated W-9 form was used.
Essentially, the IRS is saying:
Please review and correct the information for the listed payee(s).
For a detailed breakdown of how the CP2100 process works and what steps the IRS expects from payers, see our IRS CP2100 Notice and B Notice Guide (https://www.accountingportal.com/irs-cp2100-notice-b-notice-guide/
What Is a B Notice?
A B Notice (short for Backup Withholding Notice) is a formal notice you must send to the vendor or payee whose information does not match IRS records.
It notifies them of the mismatch and requests a correction.
Types of B Notices
First B Notice
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Send within 15 business days of receiving the CP 2100 Notice.
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Include Form W-9 so the payee can correct their name or TIN.
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If they do not respond within 30 days, begin backup withholding at 24%.
Second B Notice
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Send if you receive another CP 2100 Notice for the same payee within three years.
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Do not include a Form W-9 this time.
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The payee must contact the IRS or SSA directly to correct their records.
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Begin backup withholding immediately and continue until IRS verification is received.
You can also view a sample Second B Notice to better understand what information needs to be included when notifying vendors: https://www.accountingportal.com/bnotice-sample-second-bnotice/
Step-by-Step: What to Do After Receiving a CP 2100 Notice
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Review the notice and identify which payees were flagged.
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Check your own records to rule out a simple data entry error.
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Send the appropriate B Notice (First or Second) within 15 business days.
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Keep documentation showing when and to whom notices were sent.
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Track responses and updated W-9 forms from vendors.
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Begin backup withholding if no corrected information is received within 30 days.
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Maintain all records and correspondence for at least four years.
What Is Backup Withholding?
Backup withholding is a requirement to withhold 24% of future payments to a payee whose TIN information cannot be verified.
The withheld amount is reported on Form 945 (Annual Return of Withheld Federal Income Tax).
Failure to perform backup withholding when required may result in penalties equal to the uncollected tax plus interest.
How to Prevent Future CP 2100 Notices
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Use the IRS TIN Matching Program (available through IRS e-Services) to verify information before filing 1099s.
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Request updated W-9 forms annually or whenever a vendor’s business name or ownership changes.
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Keep your accounting records consistent with the exact information listed on W-9 forms.
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Educate vendors about the importance of accurate taxpayer information.
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Document all communication related to W-9 collection and verification.
Frequently Asked Questions
Does a CP 2100 Notice mean I owe taxes?
No. A CP 2100 Notice is not a bill or an audit. It only alerts you that some information on your Form 1099 does not match IRS records.
What happens if a vendor does not respond?
If the vendor fails to respond within 30 days, you must begin backup withholding of 24% on all future payments until a valid W-9 is received.
Can I still be penalized after correcting the issue?
If you respond promptly, send the required B Notice, and maintain proper documentation, the IRS typically waives penalties for reasonable cause.
How long should I keep CP 2100 and B Notice records?
Keep all related documentation, including copies of notices and vendor responses, for at least four years.
For more common scenarios and practical advice, visit our B Notice Q&A resource here: https://www.accountingportal.com/b_notice-qa/
Key Takeaways
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A CP 2100 Notice is a warning, not a penalty.
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Send B Notices within 15 business days.
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Start backup withholding if no response is received.
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Use the IRS TIN Matching Program to prevent future issues.
If you’re preparing your own notices, check out our IRS Notice Sample templates for clear examples: https://www.accountingportal.com/notice-sample/