Is there a legal precedent that states a new vendor setup is required if name and EIN changes for a client?


We had this same question come up recently. I conferred with our practitioner experts, and here are the replies I received:

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 old 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 separate the old transactions from the new ones, 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.

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