Taxpayer Identification Number (TIN)
A Taxpayer Identification Number (TIN) is a unique identification number used by the Internal Revenue Service (IRS) in the administration of tax laws. While there are various types of TINs, all businesses will have some form of TIN, which will act as a unique identifier of a business entity.
The list of TIN types are the following:
- Social Security Number (SSN)
- Employer Identification Number (EIN)
- Individual Taxpayer Identification Number (ITIN)
- Taxpayer Identification Number for Pending U.S. Adoptions (ATIN)
- Preparer Taxpayer Identification Number (PTIN)
Today, Middesk focuses on entities that have EINs, also known as a Federal Tax Identification Numbers (FEIN), which are assigned to business entities, as well as estates and trusts.
All valid business entities will have an EIN issued by the IRS. The Federal government requires a legal entity have an EIN in order to pay employees and to file business tax returns. To be considered a Partnership, LLC, Corporation, S Corporation, Non-profit, etc., a business must obtain an EIN when incorporating.
EINs do not expire. Once an EIN has been issued to an entity, it will not be reissued. As such, each EIN is unique to a business and persists over time.
How Middesk helps verify EINs
Verifying the EIN of a business is a crucial part of business verification. When creating a Business through Middesk with a TIN, Middesk will verify that the EIN is valid and that it matches the name passed to Middesk. If the EIN is unable to be verified or does not match the name provided, Middesk will perform a series of lookups to identify alternate names that may be associated with that EIN.
Verifying a TIN and Business Name match is important for a couple of reasons:
- All state and legal filings associated with a Business are typically traced through the Business's legal name. Without the correct entity legal name, Middesk is unable to conduct accurate screenings of that business for reports like Registration Records, which may subsequently delay onboarding.
- If onboarding clients that will process over $20,000 and 200 payments in a calendar year, you must file a form 1099-K with the IRS. The 1099-K requires a merchant’s Tax ID, legal name, address, and total number of transactions for the calendar year. If the company files inaccurate, incomplete, or tardy returns, it may be fined hundreds of dollars per erroneous filing, with no maximum penalty.
All TINs should be passed as a 9-digit number with no formatting. For example, Middesk's TIN of
37-1883180should be passed as
When a TIN is passed for verification, Middesk can return any of the following responses:
|Success||The IRS has a record for the submitted TIN and Business Name combination||Found|
|Failure||We believe the submitted TIN is associated with a different Business Name||Mismatch|
|Failure||The IRS does not have a record for the submitted TIN and Business Name combination||Not Found|
|Failure||TIN/name failure - Duplicate request||Duplicate|
|Failure||TIN/name failure - IRS is unavailable||Unavailable|
In addition to the responses above, and in the event a TIN is found to not be issued, the following response will be appended:
|Failure||TIN has not been issued by the IRS. There is often a delay after formation for the IRS database to process TINs for new businesses.||Not Issued|
Verifying EINs against submitted people
Based on IRS documents, some small businesses like single-member LLCs have EINs that match against an officer's name instead of the registered business name. Middesk has an optional feature to verify if the submitted EIN matches the person's name in the case that it failed to match with the business name. Contact your account manager or [email protected] if you would like to opt-in, and see our reference for additional information.
In the case of an error
If there is a Duplicate request or IRS unavailable error, the TIN will be retried and should be available up to several hours after the initial request. IRS unavailable errors will be retried as soon as the IRS becomes available again, which can range anywhere from several minutes to several hours. For Duplicate Request errors, they will be retried several hours after the initial request was made. If the request fails during the retry attempt, the TIN will be rescheduled and retried until the request is successful. Upon a successful retry, a
tin.retried webhook will be emitted.
TIN Retry Workstream:
- End user submits a business by calling Middesk’s Create a Business Endpoint
- Middesk sends a business.created webhook indicating that the business was successfully created in our system and evaluation of the business begins
- Middesk parses and returns SOS results successfully. However, the call out to the IRS API fails due to downtime. The other attributes have been completed successfully, so Middesk moves this business from “status”: “pending” to “status”: “in_review”
- This status change results in Middesk sending a business.updated webhook. This webhook shows the IRS error
- Middesk begins retrying the TIN request to the IRS ~6 hours until it can be completed successfully
- Middesk sends a tin.retried webhook with the updated results from the successful call to the IRS API
- [Optional] - Upon receipt of the tin.retried webhook, you can make a request to Middesk’s Retrieve a Business endpoint, passing in the business_id field received in the webhook. Middesk returns the full business object in the response, which includes the updated tin information
For more details about TINs, see our reference or reach out to [email protected]
TIN Match Service Availability Endpoint
Middesk’s TIN Match Service endpoint supports verifying up-to-date information about the IRS health status and availability. This endpoint communicates if our TIN Matching services are available or whether we are experiencing downtime due to a potential IRS outage. The TIN Match Service endpoint reflects the TIN Match Service's status through an availability threshold over a sliding window to reduce endpoint flakiness. For Middesk, we have categorized TIN Match as available if at least 50% of TIN verifications were successfully issued over the past five minutes (API Reference).
Potential Use Cases for the TIN Match Availability Endpoint
The TIN Match Service endpoint may be helpful for our partners that will want to surface the IRS reliability to their end clients/users, especially if TIN verification is a critical attribute in their compliance workstreams. Other best practices during an IRS outage may include diverting end users/applicants to a fallback onboarding experience or approval criteria or soft-onboarding users with restricted access to specific products.
TIN Match Service Outage Experience for Dashboard Users
For our dashboard users, our TIN Match Service uptime is also visible on our status page, which highlights and provides an overview of our API, Dashboard, and TIN Match availability. On the status page, you can also subscribe for email updates for any Middesk/TIN Match outages. Middesk will also proactively alert dashboard users whenever an identity report encounters an IRS outage error, and Middesk will send an email once the TIN match has been successfully verified after the IRS is available again.
Updated 3 months ago