CUNA Comment Letter

Receipt of Multiple Notices With Respect to Incorrect Taxpayer Identification Numbers

October 1, 2002

CC:ITA:RU (REG-116644-01)
Room 5226, Internal Revenue Service
POB 7604
Ben Franklin Station
Washington, DC 20044

Dear Sir or Madam:

The Credit Union National Association appreciates this opportunity to comment on the Internal Revenue Services’ (IRS’) proposed rule regarding incorrect taxpayer identification numbers (TINs) and backup withholding. CUNA represents more than 90% of our nation’s 10,300 state and federal credit unions.

CUNA appreciates the IRS’ efforts to clarify the method of determining whether a payor has received two notices that a payee’s TIN is incorrect. Under the proposal, if a payor receives two or more notices with respect to the same account during a three-year period, the payor must begin backup withholding unless the payee provides verification of its correct TIN. Currently, the Internal Revenue Code does not specify that two or more notices of incorrect TIN relating to the same payee and the same year but received in different calendar years count as one notice. Therefore, credit unions must send a first notice to the member after receipt of the first notice of incorrect TIN and a second notice after receipt of the second notice, even if the second notice relates to information for the same year as the first notice. According to the proposal, when a credit union receives two or more notices of incorrect TIN with respect to the same member's account for the same year, the credit union is treated as receiving one notice, regardless of the calendar year in which the notices are received. This means that if the credit union receives a notice regarding a member in one year and the following year receives a penalty notice with respect to the same payee and the same year as the original notice, the credit union is not required to make an annual solicitation for the member's TIN, as long as the credit union already sent the required “B-- notice. While most credit unions typically do not receive multiple notices of incorrect taxpayer ID numbers relating to the same members’ account for the same tax year, we support the IRS’ proposed changes because they will reduce the overall regulatory burden associated with backup withholding for payors and payees.

Thank you for the opportunity to share our comments. If you have any further questions, please contact Mary Dunn ( or Catherine Orr ( at our e-mail addresses or at (202) 638-5777.


Mary Mitchell Dunn
Associate General Counsel

Catherine Orr
Senior Regulatory Counsel