September 28, 1989
Incorrect Taxpayer Identification Numbers
WASHINGTON - The Internal Revenue Service will delay until 1990 sending
banks and other payers of interest and dividends notices that identify missing or incorrect taxpayer identification numbers the payers provided for their customers. The delay will enable the IRS to ensure that notices will be properly sent to the affected payers.
Earlier the IRS said it would send notices to payers in the fall of 1989.
The IRS notices to payers require them to notify designated customers that the IRS has determined their taxpayer identification numbers -- or TINs -- are incorrect. The IRS notices also require payers to impose backup withholding on accounts of these customers if the customers do not properly furnish correct TINs to the payers generally within 30 days.
For individuals, the TIN is the social security number. For others it is the employer identification number. The IRS checks customers' TINs with records of the Social Security Administration and the IRS to determine if they are correct. The IRS then notifies payers of accounts with incorrect TINs.
The Interest and Dividend Compliance Act of 1983 provides for backup withholding, which means that 20 percent of payments such as interest and dividends must be withheld when taxpayers fail to provide correct TINs to payers.
In October 1988 the IRS said it was asking banks and other payers to notify their customers whose TINs appear incorrect, so they could resolve any problems with payers, the Social Security Administration or the IRS.
Announcement 89-121, which is attached, will appear in Internal Revenue Bulletin 1989-40, dated Oct. 2, 1989.
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