Definition of Business Name Control Code

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.

What is a business name control code?

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:

1. Creating a “business name control code.” This is a sequence of alphanumeric characters based on the business’s legal name on the tax filer’s application for either a taxpayer identification number (TIN) or an employer identification number (EIN). (Most codes are based on the first four characters in the business’s name listed on the EIN application and may include hyphens and/or ampersands, the only two special characters allowed.)
2. Verifying the business name/EIN combination with the control code on a taxpayer’s return (in the Return Header section) is correct by matching the information against a file containing all agency-issued EIN information in the agency’s e-file database.
3. Comparing the business name control code listed on the return or extension’s header with the name control code listed in the IRS file.

The “first four-characters rule” generally applies to all business structures, including:

• A sole proprietorship
• Partnerships
• Corporations
• S corporations
• Limited liability companies (LLC)
• Filings involving trusts and estates.

Business Name Control matrix rules

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:

• The IRS will use a three-character code for business names with fewer than four letters. For example, the control code for the business name “Imp” would be “IMP.”
• The agency drops invalid characters in a name, such as a comma or period. It would likely give the business name “NX.com” the control code “NXCO.”
• The IRS will only include the word “the” in a control code if “the” is followed by one word. For example, the business name “The Seaside” will likely receive the control code “THES.” In contrast, the business name “The Seaside Inn” will likely receive the code “SEAS.”

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.

Why business name control codes matter to your business

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.

Actions that trigger reject errors

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.

Penalties for errors

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:

• Filing a tax return, if qualified to do so.
• Filing a tax return on time.
• Paying all taxes owed on time and through the proper process.
• Preparing an accurate return.
• Providing accurate or truthful information on returns.

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.

Preventing control code errors

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:

• Make sure the EIN is correct.
• Update name changes and submit the correct files for doing so.
• Review the “Business Name Control matrix rules” section below for details on how the IRS selects name control codes.
• Businesses that have submitted a name-change request should check the Name Change checkbox and transmit the return.
• Contact an IRS representative, if there’s one onsite, for questions.

Handling post-filing errors

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:

• Calling the IRS e-Help Desk at 1-866-255-0654 and following the prompts. Call the Business & Specialty Help Line at 1-800-829-4933. To get help, filers must meet one of the following criteria:
  1. Must have checked the paid preparer and the paid preparer authorization on the last filed return.
  2. Be an officer of the corporation.
  3. Have or provide a Form 8821 Tax Information Authorization allowing the filer to discuss the business’s entity information.
  4. Have or provide a Form 2848 Power of Attorney and Declaration of Representative authorizing the filer to discuss the business’s entity information.
• Having or providing a Form 2848 Power of Attorney and Declaration of Representative authorizing the filer to discuss the business’s entity information.
• Contacting an Accounts Management Representative at 800-829-4933 for immediate help with name control issues, with the proper authorization and disclosure requirements. A business’s authorized representative can do the same.
• Checking the Name Change checkbox on the rejected return and retransmitting it if a business name change was filed the previous tax year.

Summary of the definition of business name control code

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:

• Understand business name control codes.
• Use the tools they need to avoid tax-return rejections and possible penalties and fees.
• Avoid tax-file rejections.
• Handle post-filing errors.
• Know how to get help with their return.