IRS Compliance Letters

Why to keep this IRS form when you get it.

When businesses apply for a taxpayer identification number (also called an Employer Identification Number or EIN) they will get a letter in the mail known as a CP 575 letter. This letter outlines your assigned EIN for tax purposes.

Why business owners ask for this form:

cp575While most companies pay careful attention to the actual EIN (or TIN) that is assigned, it is also critical to be sure that your name and address are also identical to the information on any financial and banking forms, especially credit card processing, check acceptance, W2, and financial disclosure forms. In the world of credit card processing, a mismatch between the information held by your processor and your CP 575 can lead to a 28% withholding on all payments. This can ruin some companies before they get the problem resolved, as the withheld money is not returned until the next tax year.

TIN Matching and Verification

If you have a merchant account, it is possible that you acquired a company that has different TIN information than you operate under right now. In this case, you may need to change the information, or be sure that it was switched with the IRS during your acquisition or merger. In such a case you will want to request form 147c, which will reveal what the IRS has on file. Be sure to verify that spelling and numbers are EXACT compared to what you have.

Also important on this form is the IRS designation for what type of forms you should file and when. If the IRS is expecting periodic 1120 forms, or other information for any reason, then it behooves you to have those forms completed and sent by the due date, since the clock starts ticking on the date they assign. Your tax adviser may work with the IRS to find different filing dates.

Note that many companies may need a copy of the CP 575 letter in order to verify accuracy in their own records, or they may ask for a copy in addition to a W9 form.