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ITG FAQ #4 Answer-When is backup withholding applicable?

IRC 3406(a) states backup withholding is applicable in the case of any reportable payment if:

  • the payee fails to furnish his/her Taxpayer Identification Number (TIN) to the payor in the manner required;
  • the IRS notifies the payor that the TIN furnished by the payee is incorrect;
  • there has been a notified payee underreporting;
  • there has been a payee certification failure.

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Page Last Reviewed or Updated: 02-Aug-2016