The Internal Revenue Service’s Information Reporting Program Advisory Committee issued its annual report for 2015, with numerous recommendations including changes in the IRS’s Taxpayer Identification Number Matching Program.
The TIN Matching Program is one of the IRS’s online pre-filing e-services, allowing “authorized payers” the opportunity to match 1099 payee information against IRS records prior to filing information returns in order to avoid tax penalties.
In the 2015 report, the IRPAC recommends penalty relief for name-TIN mismatches in cases where filers under current rules are not permitted to access the IRS TIN Matching Program. In addition, the IRPAC report requested a new checkbox on Forms W-9 and W-4P to authorize information return filers to validate the payee’s name-TIN combination through the IRS TIN Matching Program.
The committee noted that until legislation is enacted expanding eligibility to use the TIN Matching Program to include filers of information returns in addition to returns that report payment types subject to backup withholding, the IRS should provide special relief from assessment of incorrect TIN penalties for filers of non-wage information return types for which the current rules do not permit TIN validation in the TIN Matching Program.
The IRPAC report made a number of other recommendations involving instructions for Form W-9, and the reasonable cause penalty abatement process. The report also includes numerous other recommendations related to the Foreign Account Tax Compliance Act, the Affordable Care Act, cost basis and Form 1099-K reporting, the electronic transmittal of employer-withheld IRS tax levy proceeds, business taxpayer identity theft, treatment of negative interest for U.S. tax information and other issues.
For example, IRPAC asked the IRS to incorporate into the instructions for Form W-9 all of the clarifications which were issued April 10, 2015, but are not commonly consulted by taxpayers because they are only available on an IRS Web page and that Web page is not linked to nor mentioned in the Form W-9 and instructions on irs.gov. In addition, IRPAC recommended that a substitute Form W-9 that will be used only for accounts not subject to FATCA may omit a statement that says, “The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct.”
IRS Commissioner John Koskinen thanked the committee members for the report. “IRPAC members make an important contribution to tax administration by devoting a great deal of their valuable time assisting the IRS with the most important information reporting issues of the day," he said in a statement.
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