Backup Withholding

Taxpayers who substantially underreport their income may be subject
to backup withholding. Payers, such as financial institutions are
notified to withhold 20 percent of payments as backup withholding.

Backup withholding may also apply to taxpayer accounts when there is
no taxpayer indentification number (TIN) or when the TIN is incorrect.
Internal Revenue Service centers notify the financial institutions of
discrepancies regarding TINs. The institutions then ask the taxpayers
to certify the correctness of their TINs using Form W-9. "Request for
Taxpayer Identification Number and Certification," or its equivalent.
Publication 916, Information Returns, contains more information
about backup withholding.

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