I am not sure which forum to post this under so I choose this one due to CIP implications even though it is impacting the W9 reporting.

When the account was opened the business customer provided the IRS letter with the EIN that had been issued to the LLC and this is the number on the account. However the business showed on the IRS B Notice report showing as TIN/name mismatch.

The customer signed the W9 validating the EIN was correct that was being used on the account for reporting interest earned. However when I went onto the Texas Secretary of State website to look up the franchise tax account status, I am unable to pull the customer up using the EIN issued by the IRS. Evertyhing points to a different Taxpayer number. The customer wants to know why we are withholding on this account and since I am new to the process, I do not know how to handle this question.

Any help would be appreciated.

The number on the TSofS site may or may not reflect the customer's actual IRS EIN. If they gave you a copy of the IRS letter, are you sure you have the number correct on your system and you have the LLC titled correctly compared to the letter. I assume, since you received a B Notice, you properly informed the borrower of the issue. If you have a received a certified W-9 after the notification, why are you withholding. If everything is correct, then they should be pursuing the issue with the IRS.

I am not sure why we are withholding since this is my first experience with this but I wanted to confirm my next steps.

I have verified that the name is the same in our system as the letter issued by the IRS and we have a W-9 certified by the customer. So it appears we have done all we can to resolve the issue and now we stop withholding and refer the customer to the IRS.

Correct?

Sorry but this was dumped in my lap and I have just been reading the IRS publication to figure this out.

Correct; you cannot fix this. Your customer can.

Obviously, signing a new W-9 doesn't actually "fix" anything. You will likely get a second B-Notice on this customer next year. It will indicate:

If the TIN is an EIN, the payee must contact the IRS to get his or her employer identification number validated on the IRS Letter 147C.

If your customer is smart, he will do it now instead of waiting to do the same dance next year.

P.S. It is possible that the mismatch is occurring because the name used for information reporting differs in some small way from the name to which the number was assigned. Look carefully at the IRS letter that assigned the number and compare it to the name reflected in the account title.