March 29, 1994
TO: OPERATIONS MEMBERS NO. 9-94
TAX MEMBERS NO. 10-94
TRANSFER AGENT ADVISORY COMMITTEE NO. 12-94
RE: IRS TAXPAYER IDENTIFICATION NUMBER MATCHING PROGRAM
__________________________________________________________
As you may know, the Internal Revenue Service ("IRS") has been working
for some time to develop a "Taxpayer Identification Number ("TIN") matching
program" to assist payors in providing the correct TIN for each payee for whom
tax information reporting is required. Specifically, the TIN matching program
will enable a payor to know at the time an account is opened whether the
payee's name and TIN combination "match" or whether there is a mismatch which
will generate a "B" Notice under the backup withholding rule of Code section
3406(a)(1)(B).
The attached temporary and proposed regulations issued by the IRS create
a prototype online matching program for use on a voluntary basis by 200
taxpayers selected by the IRS at random. Under the prototype program, which
will run for up to two-years, a payor may furnish the IRS, via its own
computer and modem, with the name/TIN combination provided by a payee. The
IRS will then advise the payor whether the name/TIN combination matches a
name/TIN combination in the IRS' records.
The temporary regulations provide that neither the decision whether to
participate in the matching program nor any TIN matching information received
through the program will be taken into account in determining whether a payor
has reasonable cause for failing to file a correct information return or
failure to furnish a correct payee statement. In addition, information
concerning an incorrect name/TIN combination received through the program will
not be considered a notice of an incorrect TIN for purposes of triggering
backup withholding.
Written comments on the proposed regulations are due May 5, 1994, and a
hearing on the regulations has been scheduled for May 20, 1994. Requests to
testify must be submitted by April 22, 1994. Please contact the undersigned
at (202) 326-5837 by April 18 with any comments that you believe the Institute
should submit.
We will keep you informed of further developments.
Peter J. Cinquegrani
Assistant Counsel - Tax
Attachment