You paid a contractor, reported the payment on a 1099, and a few months later you receive a CP2100 or CP2100A notice from the IRS stating that the name and tax identification number (TIN) do not match their records. The clock is ticking: you have 15 business days to send the correct Notice B to the payment recipient, according to IRS Publication 1281.
What is the CP2100 notice and why are you receiving it?
Notice CP2100 (or CP2100A, the version for those who file fewer forms) is an IRS notification indicating that one or more of the Name/TIN you reported on a Form 1099 do not match IRS or Social Security records. It doesn't necessarily mean you did anything wrong—often the error is the payee's (misspelled name, transposed TIN)—but the responsibility for correcting it within the deadline lies with the person who filed the 1099.
The deadline: 15 business days, not calendar days
You have 15 business days from the date of the CP2100/CP2100A notice, or from the date you received it (whichever is later), to send notice B to the payment recipient. Note: these are business days, not calendar days, so the actual timeframe is usually about three calendar weeks. Count from the day after the date printed on the notice, or from the day you confirm receipt if that was later.
The two types of B notice: they are not the same procedure
This is where many businesses go wrong, because they assume that notice B is always the same:
- First warning B: It is sent along with a New W-9 Formasking the beneficiary to confirm or correct their Name/TIN. This is the standard response the first time you receive a CP2100 about that account.
- Second notice B: It is sent if you receive a second CP2100/CP2100A on the same account within a period of 3 calendar yearsIn this case, simply requesting a new W-9 form is no longer sufficient—the notice instructs the recipient to obtain a new form. contact the IRS or the Social Security Administration directly to obtain and confirm the correct Name/TIN combination, and bring you that official confirmation.
Sending a first Notice B when a second one was actually required (or vice versa) can leave you without protection against additional withholding if the IRS reviews the case later.
How the shipment should look: the envelope detail matters
Publication 1281 is specific about a detail that may seem minor but isn't: the envelope you use to send Notice B must be clearly marked "IMPORTANT TAX INFORMATION ENCLOSED" or "IMPORTANT TAX RETURN DOCUMENT ENCLOSED ." This isn't just a courtesy—it helps demonstrate, if the IRS requests it later, that you complied with the good-faith notification process (known as "B-Request" or B-Notice compliance) within the deadline. Publication 1281 itself includes a ready-to-use Notice B sample letter, so there's no need to draft it from scratch.
If the beneficiary does not respond: additional withholding (backup withholding)
If the payee does not respond with the correct information in a timely manner, you are required to initiate backup withholding of 24% on future payments to that account. You must begin this withholding no later than 30 business days after the date of the CP2100 notice (or the date you received it, whichever is later).
This means that, from that point on, you must withhold 24% of any payment you make to that beneficiary and report it to the IRS, until they provide you with the correct and verifiable information.
Quick checklist to avoid missing the deadline
- Write down the exact date of the CP2100/CP2100A notice on the same day it arrives.
- Allow 15 business days — not calendar days — to send notice B.
- Confirm if this is the first or second warning about that account in the last 3 years.
- Attach a new W-9 (first notice) or indicate that you should contact the IRS/Social Security (second notice).
- Mark the envelope as "IMPORTANT TAX INFORMATION ENCLOSED".
- If there is no response, activate the 24% backup withholding before 30 business days have passed since the notification.
FAQ
What happens if I completely ignore the CP2100 warning?
You are subject to IRS penalties for failing to comply with the "B application" requirements and liability for not initiating backup withholding on time.
Is notice B sent by postal mail or can it be electronic?
Publication 1281 contemplates physical delivery with the envelope marked; confirm with your tax advisor if your case allows electronic notification according to the current rules.
Can I stop withholding the 24% once the beneficiary responds?
Yes, once you receive the correct Name/TIN confirmation, you can stop the additional hold on future payments.
Does this apply only to 1099-NEC contractors?
Applies to any type of reportable payment where the Name/TIN does not match, including different types of 1099, not just the 1099-NEC for contractors.
Related: Other notices and forms you can't ignore
If you never requested a W-9 form from a contractor before the first payment, check out Form W-9: If you don't request it, you pay 24% , and if you want to understand the CP2100 notice in more detail before it arrives, see IRS CP2100 Notice: What it is and what you should do . If you also withhold taxes on payments that aren't regular payroll, don't miss our step-by-step guide to Form 945.
If your corporation is closing or has requested an extension to file its return, it's also helpful to review what to do with your EIN after Form 966 and what Form 7004 does NOT cover before you miss any deadlines.
Conclusion
Notice B is not optional or something that can be postponed: you have 15 business days to respond correctly, depending on whether it's the first or second notice regarding that account, and a maximum of 30 business days to activate backup withholding if there's no response. IRS Publication 1281 provides a sample letter—the real challenge is not letting the clock tick.
Did you receive a CP2100 and don't know where to start? Get a quote from our team and resolve it within the deadline.
