What is a B-Notice (First vs Second B-Notice)?
Prevent B-Notices before they disrupt vendor payments with automated W-9 collection and real-time IRS TIN matching.
What is a B-Notice (First vs Second B-Notice)?
A B-Notice (also called a Backup Withholding Notice) is an IRS-required letter that a business must send to a vendor or payee when the IRS reports that the name and Taxpayer Identification Number (TIN) on a filed information return (such as a 1099) do not match IRS records. B-Notices are most commonly triggered after a business receives an IRS CP2100 or CP2100A Notice, which lists payees with incorrect taxpayer information.
The purpose of a B-Notice is to notify the vendor that the IRS has flagged their taxpayer information and to request updated documentation so the payer can correct their records and remain compliant.
If B-Notices are not handled properly, businesses may be required to begin backup withholding and may face penalties.
Why Do B-Notices Happen?
B-Notices are issued when the IRS cannot match the vendor’s name and TIN combination to their records.
Common reasons include:
Typo in EIN/SSN/ITIN
Vendor used a DBA instead of legal name
Missing “LLC” or “Inc.” in the name
Wrong taxpayer name field used from W-9
Vendor changed legal name or entity type
Vendor provided the wrong TIN type (EIN vs SSN)
Most B-Notices are caused by simple data issues, not fraud.
What Triggers a B-Notice?
A B-Notice is triggered after the IRS sends the payer a CP2100/CP2100A notice.
The IRS notice identifies:
- which payees had mismatches
- what type of mismatch occurred
- which action is required
After receiving the IRS notice, the payer must contact the vendor using the B-Notice process.
CP2100 is the IRS notice to the payer. A B-Notice is the letter the payer sends to the vendor.
What is the Purpose of a B-Notice?
A B-Notice is intended to:
- inform the vendor that the IRS flagged their name/TIN
- request corrected taxpayer information
- reduce the likelihood of future mismatches
- determine whether backup withholding must be applied
B-Notices protect the IRS reporting system by ensuring taxpayer data is accurate.
Proper B-Notice handling helps businesses avoid repeat IRS notices and compliance penalties.
First B-Notice vs Second B-Notice (Key Differences)
There are two types of B-Notices:
- First B-Notice
- Second B-Notice
These are not optional categories—the IRS requires different actions depending on whether it is the first or second time a payee has been flagged.
What is a First B-Notice?
A First B-Notice is the initial notice sent to a payee after the IRS reports a name/TIN mismatch for the first time.
What the payer must do:
- Send the vendor a First B-Notice letter
- Request that the vendor complete a new Form W-9
- Update vendor records with corrected information
- Maintain documentation of the outreach
The primary purpose of a First B-Notice is to request an updated W-9 from the vendor.
Common First B-Notice scenario:
A vendor’s EIN was entered incorrectly in your system or the vendor provided a DBA name instead of their legal IRS name.
What is a Second B-Notice?
A Second B-Notice occurs when the same vendor is flagged again for a mismatch after a First B-Notice has already been sent previously.
Second B-Notices require more strict documentation than First B-Notices.
What the payer must do:
- Send the vendor a Second B-Notice letter
- Require the vendor to provide official verification of their TIN
- Request documentation issued by the IRS or SSA confirming the correct taxpayer ID
A Second B-Notice is more serious and usually cannot be resolved by a simple W-9 alone.
First vs Second B-Notice Comparison Table
| Category | First B-Notice | Second B-Notice |
|---|---|---|
| Trigger | First IRS mismatch notification | Repeat mismatch after prior B-Notice |
| Vendor response required | New W-9 | IRS/SSA-issued proof of correct TIN |
| Compliance severity | Moderate | High |
| Likelihood of backup withholding | Possible | Higher risk |
| Common cause | Data entry errors, missing suffix, DBA | Vendor information repeatedly incorrect |
Organizations must track which vendors have received first notices to correctly determine second notice requirements.
What Happens if a Vendor Does Not Respond to a B-Notice?
If the vendor does not provide corrected taxpayer information within the required timeframe, the payer may be required to begin backup withholding on future payments.
This means:
- withholding a portion of vendor payments
- remitting the withheld amount to the IRS
- reporting the withholding properly
Backup withholding is often the most painful consequence of unresolved B-Notices because it creates accounting complexity and vendor disputes.
B-Notice Example Scenarios
Example 1: First B-Notice (Simple Mismatch)
Vendor submitted:
- Legal Name: Apex Consulting
- EIN: 12-3456789
IRS record is:
- Apex Consulting LLC
Mismatch occurs because the vendor name is missing “LLC.”
Result: First B-Notice is issued and vendor submits corrected W-9.
Example 2: Second B-Notice (Repeat Issue)
Vendor previously submitted a corrected W-9, but the IRS flags them again in a later filing year.
Result: Second B-Notice is issued, requiring official IRS/SSA verification documentation.
Example 3: Vendor Refuses to Respond
Vendor ignores multiple requests to submit corrected taxpayer information.
Result: Backup withholding may be required until valid information is provided.
Common Mistakes Businesses Make With B-Notices
1. Waiting Too Long to Send the Notice
IRS notices include strict deadlines. Delays can increase compliance exposure.
2. Sending the Wrong Type of Notice
Organizations must know whether the vendor is a first-time mismatch or a repeat mismatch.
3. Not Tracking Prior B-Notice History
If the vendor was flagged previously, the payer may accidentally treat a Second B-Notice like a First B-Notice.
4. Not Maintaining Documentation
Businesses should keep proof of notice delivery, W-9 collection, and follow-up actions.
5. Not Fixing Vendor Data at the Source
Correcting data only in spreadsheets but not in the ERP/AP system leads to repeated mismatches.
B-Notice problems often repeat when vendor master data is not properly corrected.
How to Prevent B-Notices
The best way to prevent B-Notices is to avoid name/TIN mismatches before filing season.
Best practices include:
Collect W-9 forms during vendor onboarding
Validate name and TIN using IRS TIN matching
Revalidate vendor lists annually before filing
Store vendor legal name (not DBA name)
Maintain audit-ready records and validation logs
Automate vendor outreach workflows for corrections
Proactive validation is the easiest way to reduce CP2100 notices and eliminate B-Notice workload.
Frequently Asked Questions (FAQ)
Is a B-Notice the same as a CP2100 Notice?
No. A CP2100 Notice is sent by the IRS to the payer. A B-Notice is the letter the payer must send to the vendor.
How do I know if it is a First or Second B-Notice?
It depends on whether the vendor has previously been flagged and whether a prior B-Notice was issued. Businesses must maintain vendor history records to track this.
Does a B-Notice mean the vendor is fraudulent?
Not usually. Most mismatches are caused by typos, missing suffixes, DBA names, or outdated W-9 information.
Can a First B-Notice be resolved with a W-9?
Yes. A First B-Notice typically requires the vendor to submit a corrected W-9.
Can a Second B-Notice be resolved with just a W-9?
Usually no. Second B-Notices typically require official documentation from the IRS or SSA confirming the correct TIN.
Conclusion
A B-Notice is an IRS-required vendor notification triggered by name/TIN mismatches reported on filed information returns such as 1099s. First B-Notices typically require a corrected W-9, while Second B-Notices require stronger verification documentation from the IRS or SSA. By validating vendor taxpayer information early through IRS TIN matching and maintaining strong onboarding workflows, businesses can prevent most B-Notices and reduce compliance burden.
Reduce B-Notice Risk with TIN Comply
TIN Comply helps organizations reduce B-Notices by validating vendor name and TIN combinations against IRS records before filing season. With real-time IRS TIN matching, bulk vendor list validation, audit-ready reporting, and automated W-9 outreach workflows, TIN Comply helps businesses prevent mismatches and simplify vendor compliance.