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ITG FAQ #9 Answer-What is backup withholding?

Casinos (payers) making certain payments to payees must withhold and pay to the IRS 28% of those payments under certain conditions. Payments that may be subject to backup withholding include prizes, awards, tournaments with no entry fee, interest, rents, nonemployee compensation (e.g. entertainers, bus companies and other vendors), reportable gross proceeds and fees paid to attorneys, and medical services (including drug testing.)

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Page Last Reviewed or Updated: 02-Aug-2016