As companies chase down vendors’ missing taxpayer identification numbers (TINs), it is helpful for the master file or AP staff to know what they are looking for. If the TIN is wrong, it might not be immediately apparent. But if the TIN is “obviously incorrect,” as the IRS calls it, the IRS treats it the same as if there is no TIN.
That redounds to your company. The IRS treatment of “obviously incorrect” TINs and missing TINs is the same. And the IRS treats you to the same penalty for submitting them!
Now you cannot necessarily tell if a vendor has given you an incorrect TIN that is in the correct format, but you can tell if a vendor gives you a TIN that is what the IRS refers to as “obviously incorrect.” How? By knowing the structure of the various kinds of TINs. Here is what you need to know.
TIN Types
There are several types of TINs, but there are three relating to vendors. The first is the social security number (SSN), used by individuals, single-owner LLCs and sole proprietors. Second, the employer identification number or EIN is used by partnerships, corporations, many LLCs and may also be used by a sole proprietor. The third is an individual taxpayer identification number or ITIN, used by resident aliens and nonresident aliens who are not eligible for an SSN.
Two other types that are not of concern in vendor payments are the ATIN and the PTIN. An ATIN is an adoption taxpayer identification number—it is temporary and issued for a child born in the United States undergoing adoption. The PTIN is the preparer tax identification number, which is used by paid preparers of tax returns.
The Social Security Administration issues SSNs. The Internal Revenue Service issues all other TINs.
TIN Formats – How to Know If a TIN Is “Obviously Incorrect”
A correct TIN will have exactly nine digits, with no alpha characters. If you see alpha characters, it is not a valid TIN. If the TIN has seven digits or ten digits, it is not a valid TIN.
An SSN TIN will be nine digits long, in the format XXX-XX-XXXX. An EIN TIN is likewise nine digits in a slightly different format: XX-XXXXXXX. An ITIN is also nine digits – but note that the ITIN will always begin with the digit “9,” and the fourth and fifth digits will range from 70 through 88. So the ITIN format could be, for example, 9XX-70-XXXX, 9XX-79-XXXX, 9XX-81-XXXX, or 9XX-88-XXXX.
Examples of Obviously Incorrect TINs
Here are some examples of incorrect SSNs:
- 321-48-586
- 321-48-98463
- 231-4A-5865
And here are examples of incorrect EINs:
- 21-987654
- 21-9876A4
- 21-98765432
Here are some incorrect ITINs—can you tell why?
- 423-84-2341
- 921-38-2341
So, if you spot a vendor TIN with less or more than nine digits, you know it’s incorrect. Likewise, if you spot a vendor TIN that includes any letters of the alphabet, you can be sure it’s wrong. And if you see an ITIN that does not begin with “9” and the fourth and fifth digits together are not 70 – 88, then it is incorrect.
How to Know If a Nine-Digit TIN Is Correct
Suppose the TIN is nine digits with no alpha characters; it could still be incorrect, but you have to go further than looking at it. The best practice is to run the TIN and vendor name pairing through the IRS TIN Match Program.
The IRS TIN Match Program will tell you whether the vendor name and TIN match the IRS records. If so, then your records are correct. If not, double-check that you submitted the correct TIN (no typos), then go back to the vendor and ask for the correct TIN.
VendorInfo can run your vendor name/TIN combinations through the TIN Match Program for you. To find out more, contact us.