The Internal Revenue Service (IRS) recently announced in Notice 2013-56 (Notice) that it would be providing penalty relief for incorrect name and taxpayer identification number (TIN) combinations reported on Form 1099-K, Payment Card and Third Party Network Transactions. This should allow more time for companies to adjust to this new regime without concern for penalties. Note that penalties will apply to 2013 information returns if they are filed with a missing or obviously incorrect TIN.
The IRS has also laid out a revised schedule for issuing notices of missing TINs and incorrect name and TIN combinations reported on Form 1099-K. IRS notification of an incorrect name and TIN combination is commonly referred to as a ‘B’ Notice. According to the IRS, such B Notices relating to 2013 Forms 1099-K reportable payments will be sent in late 2014.
The application of backup withholding requirements to payment card or third party network payments that occur after December 31, 2012 remains otherwise effective.