IRS Tax Identification Number (TIN) Validation e-Services Update

On October 24 the Internal Revenue Service will require a stronger identity verification process for e-services users

In an effort to protect taxpayer and tax preparer data and reduce cyberattacks, the Internal Revenue Service (IRS) is changing the identity authentication process for self-help tools including TIN validation e-services. Called “Secure Access” the update requires existing e-services users to re-register and verify their identities to maintain continued access.

tin-validation-eserviceIf you currently have an e-services account to perform integrated TIN validation, you will also need to validate your identity by re-registering on or after October 24th.

The Secure Access process includes a two-factor authentication process requiring a mobile phone.  Validation can also be done over the phone by IRS assistants, which will take 5 to 10 calendar days to complete registration.

What’s the Tax Compliance Risk

Incorrect TINs (either Social Security Numbers for individuals or Employer Identification Numbers for businesses), affect your ability to properly report payments to the IRS. Since the passing and signing of the Trade Preferences Extension Act of 2015, penalties have increased for failure to timely file information returns (e.g., Forms 1099 series, Form 1042-S, among others) with the Internal Revenue Service (IRS) and failure to furnish payee statements under Internal Revenue Code (IRC) Sections 6721 and 6722.

For example, the penalty per failure to file an information return or furnish a payee statement was $100 per offense, but is now $250 per offense. In addition, the maximum calendar year penalty has increased from $3MM to $6MM. There are also penalties for late corrections and intentionally disregarding errors.

As always, IRS errors in one auditable area could open up a company’s exposure in other areas.

Tipalti Handles It

The great news is that for companies using Tipalti’s Tax Form collection and validation services as part of their supplier onboarding, there is no interruption or re-registration required. We will be updating our e-services identity prior to the deadline.

It’s another benefit to relying on Tipalti to manage tax compliance as part of the overall supplier payment operation. If you’re not already using Tipalti’s KPMG-certified process to collect and validate W-9 and W-8 series tax forms for international payees, please contact Tipalti today.

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