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Who Is Subject to Backup Withholding?


Backup withholding is a procedure in which the IRS ensures that a taxpayer, even though he/she may not have a taxpayer identification number, will still be subject to having taxes withheld on his/her income. People who are subject to backup withholding have failed to do one of the following:

  • Provide a taxpayer identification number (TIN) to their employer.
  • Have provided an incorrect taxpayer identification number
  • Have failed to report interest or dividends on previous income taxes
  • Individual has failed to report that they were not subject to backup withholding for not recording interest or dividends on previous income tax forms.

What Is a Taxpayer Identification Number?

A taxpayer identification number is an individual’s social security number or the identification number of a business or employer.

What to do if the TIN is missing

If there is no TIN provided or the one provided does not match the identity given, the IRS considers the TIN missing. For people who do not have TINs, or whose TINs are incorrect, backup withholding is mandatory until the TIN is either received or replaced and received. Until the IRS procures the missing TIN, the individual must keep a record of the taxes withheld on Form 945, Annual Return of Withheld Federal Income Tax.

What to Do To Fix the Problem of Backup Withholding

If the IRS contacts the employer of an individual and requests that the employer withhold his/her income for tax purposes, there is a way to fix the problem. Just provide the IRS with the amount of tax withheld by using a form 1099. The individual who is subject to backup withholding should record the total amount that the IRS withholds in the payments section of the appropriate income tax form. Most individuals have to provide the form by January 31 of any given year; however, if they are a broker, their form is due no later than February 15. If the due date for the forms has already passed, then the individual who is subject to withholding should call the bank or business that made their payments.



Backup Withholding. 2010.

IRS. Backup Withholding. 2010.

Tax Identification Number. 2010

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