Q. If we receive a request from a sole proprietor who would like for us to change their taxpayer ID information from their SSN to an EIN, should we modify the existing vendor record or should we create a new vendor record? Is there an IRS publication that would advise on this should be handled?
A. From two of our practitioner experts.
Sheila Velazquez, Sr. Manager, Accounts Payable & Shared Services, RLJ Entertainment:
Anytime someone requests changes of that nature, we ask that they complete a new W-9 so that we can run a TIN match with their new info OR provide us with the letter which they receive from the IRS noting the change. We never update any information without documentation.
If the name changes with the new info, then yes we would create a new vendor record because the reporting info has changed (both name and TIN).
Judy Bicking, IOFM Trainer and SME:
It is best to create a new VMF record. Inactivate the SSN VMF record to prevent new transactions, and in the attention line, state the new VMF record to direct everyone to use the right VMF account. The reason is, if you change the existing record, all the previous transactions will now look like they belong to the new (EIN) tax ID, and this is not right. I don't know of any AP system that can protect the old transactions with the SSN and then new transactions with an EIN, so it's best to keep them separate for IRS reporting, questions and audits.
As to whether there's an IRS publication that would advise on the matter, the IRS will only give their requirements. It's up to you to create the process to comply.