When onboarding a new contractor to your network, it is important to verify that they are a valid business entity. One way to do that is to confirm that the business name you’ve been provided matches a valid Tax Identification Number (TIN) which can be confirmed using IRS TIN Matching. This will also save your organization money, and your accounting department time by avoiding IRS penalties and fees associated with paying a contractor who has not properly registered with the IRS for tax purposes.
A TIN is a nine-digit number issued by the Social Security Administration or the IRS. The most common TINs are an Employers Identification Number (EIN) and a Social Security Number (SSN). It is used on Federal income tax payments and other IRS forms to identify individuals or business entities. To help business owners ensure they are accurately filing 1099s for their contractors, the IRS offers an online TIN matching platform since taxes are tracked using the TIN.
You know what a TIN is and how they are used, but do you know why TIN matching should be one of the first things you do when your organization begins working with a new contractor?
Checking TINs is an effective way to verify that a contractor or company that you are bringing into your organization’s contractor network is legitimate. Legitimate companies pay taxes and are registered with the IRS and assigned a TIN that matches their business name. Omitting this step as a part of your contractor onboarding process could mean that you later find out that the company isn’t legitimate through other means.
Some companies may provide poor workmanship or customer service and be asked to leave your contractor network. TIN matching as a part of the onboarding process prevents these companies from leaving and then attempting to rejoin your network under a different name or by pretending to be a different company since their TIN would remain the same or they may provide a fake TIN.
An individual or company that is illegitimate and is attempting to join your network is not someone that you want to serve your customers. TIN matching offers an extra layer of protection to ensure that the contractors you work with are dedicated to acting ethically and will provide the level of service you’re looking for.
Verifying that you have the correct TINs is a simple way to reduce IRS fines and save on administrative time spent sending notices and making corrections, which usually fall on your accounting department.
You know the TIN matching process and why it’s important; now comes the time to execute it. When you work with an extensive contractor network, verifying TINs and making any needed corrections can be a full-time job. At PlusOne Solutions, we take care of that for you. We handle the entire process from start to finish by checking the TINs and then by working directly with your contractors to correct any issues.
We help you access the benefits of a comprehensive TIN-matching program while allowing you the time to focus on your core business objectives. Contact us today to learn more about our TIN matching services and other contractor compliance solutions.
Contents are provided for information purposes only and should not be construed as legal advice. Users are reminded to seek legal counsel with respect to their obligations and use of PlusOne Solutions services.
PlusOne Solutions has been an industry leader in the risk management field by specializing in compliance programs that meet the complex challenges of geographically dispersed contractors, vendors, and employee networks. PlusOne Solutions protects companies from possible financial, legal, and reputational risks associated with contractor and vendor relationships while creating safer work environments. To learn more, visit https://www.PlusOneSolutions.net.To receive these updates directly in your email inbox, sign up for the newsletter. Questions or comments? We want to hear from you.
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