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ITG FAQ #13 Answer-What is backup withholding?

Persons (payers) making certain payments to payees must withhold and pay to the IRS a percentage of those payments under certain conditions (Refer to Publication 15, Circular E, Employer's Tax Guide). Payments that may be subject to backup withholding include interest, dividends, rents, royalties, nonemployee compensation, and certain other payments including broker and barter exchange transactions, reportable gross proceeds paid to attorneys, and certain payments made by fishing boat operators.

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Page Last Reviewed or Updated: 06-Dec-2016