Failure to follow the backup withholding rules can result in penalties to the payer. These would be for filing incorrect information returns. The IRS tells us that the payer may also become liable for any uncollected amounts. This is often not considered but it is a rule.
A TIN on a W-9 form is considered to be "missing" when:
You as a payer find out that you are responsible to collect backup withholding when you get a CP2100 or a CP2100A notice from the IRS.
If you are a large volume filer, filing more for than 250 erroneous documents, you would get a CP2100. You would get a CP2100A for less than 250.
As a taxpayer your number is considered to be incorrect if it does not match with the name on the form, or the TIN can not be found in the records of the IRS or the Social-Security Administrations.
There is more information available.