Here are some payments subject to backup withholding…
- Interest payments
- Payment card and third-party network transactions
- Patronage dividends, but only if at least half the payment is in money
- Rents, profits, or other gains
- Commissions, fees, or other payments for work done as an independent contractor
- Payments by brokers
- Barter exchanges
- Payments by fishing boat operators, but only the part that is paid in actual money and that represents a share of the proceeds of the catch
- Royalty payments
- Gambling winnings
Here are some situations when the payer must take out backup withholding…
- If a taxpayer identification number is missing. A taxpayer identification number specifically identifies the taxpayer. This includes number like a Social Security number and an individual taxpayer identification number.
- If the name provided does not match the name registered with the IRSfor a specific TIN, taxpayers should make sure that the payer has their correct TIN.
For more information go to the IRS website.