Forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, And W-2g - General Instructions For Certain Information Returns - 2018 Page 17
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30Distribution from qualified tuition programs or Coverdell
N. Backup Withholding
ESAs.
Gambling winnings if regular gambling winnings
Interest (including tax-exempt interest and
withholding is required under section 3402(q). However, if
exempt-interest dividends), dividends, rents, royalties,
regular gambling winnings withholding is not required
commissions, nonemployee compensation, and certain
under section 3402(q), backup withholding applies if the
other payments (including broker and barter exchange
payee fails to furnish a TIN.
transactions, compensation paid to an H-2A visa holder
Real estate transactions reportable under section
who did not furnish a TIN, reportable gross proceeds paid
6045(e).
to attorneys, payment card and third-party network
Canceled debts reportable under section 6050P.
transactions, and certain payments made by fishing boat
Fish purchases for cash reportable under section
operators) may be subject to backup withholding at a 24%
6050R.
rate. To be subject to backup withholding, a payment
Reportable payments that are withholdable payments
must be a reportable interest (including tax-exempt
made to a recalcitrant account holder that is a U.S.
interest and exempt-interest dividends) or dividend
non-exempt recipient from which you have withheld under
payment under section 6049(a), 6042(a), or 6044 (if the
chapter 4. See Treasury Regulations section 1.1474-6(f).
patronage dividend is paid in money or qualified check),
or an “other” reportable payment under section 6041,
When to apply backup withholding. Generally, the
6041A(a), 6045, 6050A, 6050N, or 6050W. If the payment
period for which the 24% should be withheld is as follows.
is one of these reportable payments, backup withholding
1. Failure to furnish TIN in the manner required.
will apply if:
Withhold on payments made until the TIN is furnished in
1. The payee fails to furnish his or her TIN to you;
the manner required. Special backup withholding rules
may apply if the payee has applied for a TIN. The payee
2. For interest, dividend, and broker and barter
may certify to this on Form W-9 by noting “Applied For” in
exchange accounts opened or instruments acquired after
the TIN block and by signing the form. This form then
1983, the payee fails to certify, under penalties of perjury,
becomes an “awaiting-TIN” certificate, and the payee has
that the TIN provided is correct;
60 days to obtain a TIN and furnish it to you. If you do not
3. The IRS notifies you to impose backup withholding
receive a TIN from the payee within 60 days and you have
because the payee furnished an incorrect TIN;
not already begun backup withholding, begin backup
4. For interest and dividend accounts or instruments,
withholding and continue until the TIN is provided.
you are notified that the payee is subject to backup
The 60-day exemption from backup withholding
withholding (under section 3406(a)(1)(C)); or
applies only to interest and dividend payments
!
5. For interest and dividend accounts opened or
and certain payments made with respect to
instruments acquired after 1983, the payee fails to certify
CAUTION
readily tradable instruments. Therefore, any other
to you, under penalties of perjury, that he or she is not
payment, such as nonemployee compensation, is subject
subject to backup withholding. See 4 under
When to apply
to backup withholding even if the payee has applied for
backup withholding
below.
and is awaiting a TIN. For information about whether
6. The payment is also a withholdable payment under
backup withholding applies during the 60-day period, see
chapter 4 (sections 1471-1474) that is made to a
Regulations section 31.3406(g)-3.
recalcitrant account holder that is a U.S. non-exempt
2. Notice from the IRS that payee's TIN is incorrect.
recipient, and you are a PFFI (including a Reporting
You may choose to withhold on any reportable payment
Model 2 FFI) that elects to withhold under section 3406 to
made to the account(s) subject to backup withholding
satisfy your withholding obligation under Treasury
after receipt of an incorrect TIN notice from the IRS, but
Regulations section 1.1471-4(b)(1). See Treasury
you must withhold on any reportable payment made to the
Regulations section 1.1471-4(b)(3)(iii).
account more than 30 business days after you received
If you do not collect and pay over backup
the notice. Stop withholding within 30 days after you
withholding from affected payees as required, you
!
receive a certified Form W-9 (or other form that requires
may become liable for any uncollected amount.
the payee to certify the payee’s TIN).
CAUTION
The IRS will furnish a notice to you, and you are
Some payees are exempt from backup withholding. For
required to promptly furnish a “B” notice, or an
TIP
a list of exempt payees and other information, see Form
acceptable substitute, to the payee. For further
W-9 and the separate Instructions for the Requester of
information, see Regulations section 31.3406(d)-5 and
Form W-9.
Pub. 1281, Backup Withholding for Missing and Incorrect
Name/TIN(s).
Examples of payments to which backup withholding
does not apply include but are not limited to the following.
If you receive two incorrect TIN notices within 3 years for
Wages.
the same account, follow the procedures in Regulations
Distributions from a pension, annuity, profit-sharing or
section 31.3406(d)-5(g) and Pub. 1281.
stock bonus plan, any IRA, an owner-employee plan, or
3. Notice from the IRS that payee is subject to
other deferred compensation plan.
backup withholding due to notified payee
Distributions from a medical or health savings account
underreporting. You may choose to withhold on any
and long-term care benefits.
reportable payment made to the account(s) subject to
Certain surrenders of life insurance contracts.
backup withholding after receipt of the notice, but you
-17-
Gen. Instr. for Certain Info. Returns (2018)
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