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Treasury Regulations (26 C.F.R.)

26 CFR § 31.3406(a)-1

Backup withholding requirement on reportable payments.

Official textecfr.govlast amended

# (a) Overview.

Under section 3406, a payor must deduct and withhold 31 percent of a reportable payment if a condition for withholding exists. Reportable payments mean interest and dividend payments (as defined in section 3406(b)(2)) and other reportable payments (as defined in section 3406(b)(3)). The conditions described in paragraph (b)(1) of this section apply to all reportable payments, including reportable interest and dividend payments. The conditions described in paragraph (b)(2) of this section apply only to reportable interest and dividend payments.

# (b)

Conditions that invoke the backup withholding requirement—(1) Conditions applicable to all reportable payments. A payor of a reportable payment must deduct and withhold under section 3406 if—

(i) The payee of the reportable payment does not furnish the payee's taxpayer identification number to the payor, as required in section 3406(a)(1)(A) and § 31.3406(d)-1; or

(ii) The Internal Revenue Service or a broker notifies the payor that the taxpayer identification number furnished by its payee for a reportable payment is incorrect, as described in section 3406(a)(1)(B) and § 31.3406(d)-5.

(2) Conditions applicable only to reportable interest or dividend payments. A payor of a reportable interest or dividend payment must deduct and withhold under section 3406 if—

(i) The Internal Revenue Service or a broker notifies the payor that its payee has underreported interest or dividend income, as described in section 3406(a)(1)(C) and § 31.3406(c)-1; or

(ii) The payee fails to certify to the payor or broker that the payee is not subject to withholding due to notified payee underreporting, as described in section 3406(a)(1)(D) and § 31.3406(d)-2.

# (c) Exceptions.

The requirement to withhold does not apply to certain minimal payments as described in § 31.3406(b)(4)-1 or to payments exempt from withholding under §§ 31.3406(g)-1 through 31.3406(g)-3.

# (d) Cross references.

For the definition of payor, see § 31.3406(a)-2. For the definition of taxpayer identification number, see § 31.3406(h)-1(b).

[T.D. 8637, 60 FR 66114, Dec. 21, 1995]

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In this part (40 sections)
  1. 31.3402(h)(3)-1 · Withholding on basis of cumulative wages.
  2. 31.3402(h)(4)-1 · Other methods.
  3. 31.3402(i)-1 · Increases in withholding.
  4. 31.3402(j)-1 · Remuneration other than in cash for service performed by…
  5. 31.3402(k)-1 · Special rule for tips.
  6. 31.3402(l)-1 · Determination and disclosure of marital or filing status.
  7. 31.3402(m)-1 · Additional withholding allowance.
  8. 31.3402(n)-1 · Employees incurring no income tax liability.
  9. 31.3402(o)-1 · Extension of withholding to supplemental unemployment…
  10. 31.3402(o)-2 · Extension of withholding to annuity payments if…
  11. 31.3402(o)-3 · Extension of withholding to sick pay.
  12. 31.3402(p)-1 · Voluntary withholding agreements.
  13. 31.3402(q)-1 · Extension of withholding to certain gambling winnings.
  14. 31.3402(r)-1 · Withholding on distributions of Indian gaming profits to…
  15. 31.3403-1 · Liability for tax.
  16. 31.3404-1 · Return and payment by governmental employer.
  17. 31.3405(a)-1 · Questions and answers relating to Federal income tax…
  18. 31.3405(c)-1 · Withholding on eligible rollover distributions;…
  19. 31.3405(e)-1 · Questions and answers relating to withholding on…
  20. 31.3406-0 · Outline of the backup withholding regulations.
  21. 31.3406(a)-1 · Backup withholding requirement on reportable payments.
  22. 31.3406(a)-2 · Definition of payors obligated to backup withhold.
  23. 31.3406(a)-3 · Scope and extent of accounts subject to backup…
  24. 31.3406(a)-4 · Time when payments are considered to be paid and subject…
  25. 31.3406(b)(2)-1 · Reportable interest payment.
  26. 31.3406(b)(2)-2 · Original issue discount.
  27. 31.3406(b)(2)-3 · Window transactions.
  28. 31.3406(b)(2)-4 · Reportable dividend payment.
  29. 31.3406(b)(2)-5 · Reportable patronage dividend payment.
  30. 31.3406(b)(3)-1 · Reportable payments of rents, commissions,…
  31. 31.3406(b)(3)-2 · Reportable barter exchanges and gross proceeds of…
  32. 31.3406(b)(3)-3 · Reportable payments by certain fishing boat operators.
  33. 31.3406(b)(3)-4 · Reportable payments of royalties.
  34. 31.3406(b)(3)-5 · Reportable payments of payment card and third party…
  35. 31.3406(b)(4)-1 · Exemption for certain minimal payments.
  36. 31.3406(c)-1 · Notified payee underreporting of reportable interest or…
  37. 31.3406(d)-1 · Manner required for furnishing a taxpayer identification…
  38. 31.3406(d)-2 · Payee certification failure.
  39. 31.3406(d)-3 · Special 30-day rules for certain reportable payments.
  40. 31.3406(d)-4 · Special rules for readily tradable instruments acquired…
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