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When is backup withholding required?

  • You make reportable payments to persons (or corporations) who have not furnished their valid TIN.
  • The IRS notifies you to impose backup withholding.
  • In certain cases, with interest, dividend and broker and barter exchange accounts when the payee does not certify the TIN is correct or that they are not subject to withholding. The withholding rate is 24%. For most companies, if you receive a completed and signed W-9 backup withholding will not apply.