The business name control code is an identifier the IRS creates as a sequence of alphanumeric characters for a business based on its legal name and associated TIN or EIN.
All businesses need to have a unique identifier. This is where the business name control code becomes relevant.
The IRS is a stickler for precise recordkeeping, as HR managers know. And when it comes to the electronic filing of corporate tax returns and forms, the agency ensures that the information on these documents corresponds with the correct business entity.
The IRS verifies tax filing information by:
The “first four-characters rule” generally applies to all business structures, including:
The IRS uses a matrix for choosing business name control codes. Numeric characters range from 0 to 9, and Alpha characters from A to Z. However, the matrix includes the following exceptions to the rules:
Other control code examples for business names include:
Business name Business name control code
23rd Street Bistro 23RD
X-Y-Z Co X-Y-
L&IW Company L&IW
Nay! Inc. NAYI
When business name control codes on the tax filing documents and the IRS’s e-file database match, the agency declares that the tax e-filer’s information is correct.
IRS Publication 4164 helps tax filing entities with non-English or ethnic surnames with questions about business name control codes. Additionally, businesses should check entity name requirements with their state’s policies.
The IRS will reject tax returns when control codes in the Return Header don’t match the agency’s e-file database information.
Disparities in information involving mismatched information with business name control codes trigger a rejection message known as e-file error code R0000-900-01.
According to e-file.com, most tax filers can retransmit their electronic returns after discovering and resolving a problem. But in other cases, a previous e-filer must print and mail a hard copy of the tax return when a problem occurs.
The IRS can reject an electronic return involving control codes for several reasons, including problems based on a business’s classification.
For example, the IRS may reject a tax return from a partnership entity because it transmitted a file under a different EIN in the previous tax year.
In the case of an S corporation, a rejected return could occur because the entity filed as a corporation in the previous tax year but failed to file as an S corporation in the current tax year by filing Form 2553. As a result, the IRS still has the entity in its database as a corporation.
Submitting returns with errors or incorrect information that doesn’t match the IRS’s e-file database could delay the filing process and result in generated penalties.
The IRS charges penalties for not:
The IRS charges tax filers penalties for not paying what they owe in full. The agency also charges interest on penalties until the tax is paid in full.
A list of penalties can be found here.
The IRS recommends that businesses verify the name control code before filing if they have questions about what code to use on their e-filed tax return. Here are ways that companies can verify their name controls before filing:
If the IRS rejects an e-file because the business name/EIN combination doesn’t match the information in the agency’s e-file database, businesses can respond to an IRS notice by:
The IRS assigns every business entity a name control code that must match the EIN information in its e-file database. When organizations file their taxes, the agency will flag any mismatched information and reject the tax return.
With this HR Glossary entry, HR professionals and those with HR responsibilities in small businesses can help entities: