Trust But Verify: Automating Vendor Onboarding and Compliance

TLDR: Many procurement teams still depend on static paperwork. Relying on simple business licenses leaves businesses open to fraud. Automating IRS transcript access solves this. Companies can instantly verify a vendor's legitimacy and tax status. The result is a safer vendor onboarding process and a much faster approval cycle.

Key Highlights:

• Fraud Prevention: Detect "phantom vendors" by verifying actual business activity
• Continuous Compliance: Ensure that vendors are still in good standing throughout the entire contract
• Efficiency: Replace manual TIN matching with automated data feeds
• Risk Mitigation: Identify financial distress early to avoid mid-project bankruptcy and complications

Companies and city governments often face a conflict and have to choose between onboarding contractors quickly or vetting them thoroughly first. Traditional checks, such as W-9s and business licenses, only prove a company exists on paper. They fail to confirm if a vendor is financially stable, operationally active, or tax compliant.

This gap invites fraud. Risks range from "phantom vendors" billing for fake work to distressed contractors going bust halfway through a project. If your due diligence is limited to a one-time snapshot at the start of a contract, you are flying blind, as the financial situation of a business can change rapidly.

Automating the Data Feed

Our API delivers the same powerful automation for both compliance models. Whether you need a one-time snapshot via Form 4506-T or continuous monitoring via Form 8821, we streamline the entire retrieval process. You receive verified financial data without the need for manual administrative work.

For those using the 8821, the authorization remains active for 7 years unless it's revoked. This allows you to check a vendor's status quarterly without chasing new signatures, ensuring you spot risks before the project stalls. Read more about how we streamline these workflows in our previous blog, End the Wait: How to Finally Automate IRS 8821 Retrieval.

What to Monitor: Signs of Legitimacy

By ingesting verified data directly from the IRS, procurement teams ensure that manual checks do not miss:

• Operational Reality: Analyze the "Salaries and Wages" line on Form 1120/1065 to confirm the vendor actually employs staff.
• Revenue Verification: Compare Form 1120/1065 revenue against the bid amount.
• Tax Compliance: Detect instantly if a vendor stops making federal tax deposits. Non-compliance is often the first clear sign of liquidity distress.

Final Thoughts

Any procurement demands transparency, especially when you're dealing with public spending. Moving from manual document collection to automated data verification does more than speed up onboarding; it builds a defense against fraud and waste. Contact Us to learn how to secure your vendor onboarding today.