Internal Revenue Bulletin:  2003-28 

July 14, 2003 

Announcement 2003-45

New Backup Withholding Rate for Amounts Paid After December 31, 2002


Purpose

This announcement is to advise payers about a reduction in the backup withholding rate authorized by section 3406(a)(1) of the Internal Revenue Code. Section 105(a) of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (Public Law 108-27) reduced the rate for backup withholding on reportable payments.

New Backup Withholding Rate

For amounts paid after December 31, 2002, the backup withholding rate was reduced to 28%.

New Rate Not Reflected in 2002 Products

The backup withholding rate shown in the latest revision of the following products is incorrect for amounts paid after December 31, 2002

Tax Forms.

  • Instructions for the Requester of Form W-9

  • Instructions for the Requester of Forms W-8BEN, W-8ECI, W-8EXP, and W-8IMY

The Instructions for the Requester of Form W-9 will be revised in December 2003, to reflect the new backup withholding rate for amounts paid after December 31, 2002.

The Instructions for the Requester of Forms W-8BEN, W-8ECI, W-8EXP, and W-8IMY will be revised in August 2003 to reflect the new rates.

Technical Publications.

  • Publication 17, Your Federal Income Tax

  • Publication 225, Farmer’s Tax Guide

  • Publication 505, Tax Withholding and Estimated Tax

  • Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Corporations

  • Publication 525, Taxable and Nontaxable Income

  • Publication 542, Corporations

  • Publication 550, Investment Income and Expenses

  • Publication 583, Starting a Business and Keeping Records

  • Publication 1212, List of Original Issue Discount Instruments

The 2003 version of these publications will show the new backup withholding rate for amounts paid after December 31, 2002.

New Rate Not Reflected in 2003 Products

The backup withholding rate shown in the 2003 version of the following products is incorrect for amounts paid after December 31, 2002.

  • Form W-9, Request for Taxpayer Identification Number and Certification

  • Form W-2G, Certain Gambling Winnings

  • Form 1099-CAP, Changes in Corporate Control and Capital Structure

  • Form 1099-G, Certain Government Payments

  • Form 1099-INT, Interest Income

  • Form 1099-OID, Original Issue Discount

  • Form 1099-MISC, Miscellaneous Income

  • Form 1099-PATR, Taxable Distributions Received From Cooperatives

  • Instructions for Form 1042-S

The 2004 version of these forms and instructions will show the new backup withholding rate for amounts paid after December 31, 2002.


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