Understanding your CP542 notice

What this notice is about

You’re no longer subject to backup withholding. We’ve told your payers of interest, dividends, and patronage dividends to stop backup withholding.

What you need to do

• Make sure payers of interest or dividend income received our notice to stop backup withholding. If they didn’t, give them a copy of this notice by December 31. They’ll stop withholding within 30 days if you’re not subject to backup withholding for some other reason.
• Keep this notice for your records.

You may want to

• Read about backup withholding.
• Review Publication 1335, Backup Withholding Questions and Answers PDF.
• Use IRS Online Account to check your payoff amount, payment history, or to view transcripts.

Frequently asked questions

What is backup withholding? (updated Mar. 25, 2026)

It’s a withholding (deduction) from certain payments (mostly interest and dividends) that payers must take when instructed by us.

What is the backup withholding rate? (updated Mar. 25, 2026)

Currently, it’s 24%. It can increase or decrease with tax laws.

How long will the payer continue backup withholding? (updated Mar. 25, 2026)

Until we instruct them to stop, or until you give them written certification from us that you’re no longer subject to backup withholding.

Tips for next year

• File your tax return timely.
• Report all interest and dividend income.
• Pay all taxes due.