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83-65 Due Diligence and Certification Requirements With Respect To Taxpayer Identification Numbers and Backup Withholding

I M P O R T A N T

Officers * Partners * Proprietors

TO: All NASD Members and Other Interested Persons

Earlier this year, the provisions under the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA") with respect to withholding on dividends and interest was repealed by Congress.

Shortly after the repeal of withholding, the Interest and Dividend Tax Compliance Act of 1983 ("The Act") was enacted as a compromise measure.

Certain provisions of the Act, particularly those relating to certification requirements for taxpayer identification numbers ("TIN") and backup withholding will impact members who are payors of reportable dividends, interest or gross proceeds.

What follows is a summary of the key provisions of the temporary regulations issued under the Act. The full text of the temporary regulations, in a question and answer format, are reprinted in this notice.

DUE DILIGENCE AND CERTIFICATION REQUIREMENTS

Commencing January 1, 1984, Association members who act as payors of reportable interest and dividends or who are otherwise subject to the information reporting requirements under TEFRA, e.g., gross proceeds reporting, are subject to the due diligence and certification requirements with respect to taxpayer identification numbers and backup withholding.

The IRS is authorized to impose a penalty of $50 per failure on payors who fail to furnish a taxpayer identification number or provide the service with an obviously incorrect TIN. Additionally, the Interest and Dividend Tax Compliance Act of 1983 requires a payor to commence backup withholding at a rate of 20% on any reportable payment, i.e., dividends, interest, and gross proceeds, for any non-exempt account where either of the above conditions exists.

A payor would not be subject to penalty if the customer involved (payee) has certified, under penalty of perjury, that the taxpayer identification number furnished to the payor is the payee's correct number. Additionally, a payor would not be subject to a penalty if due diligence was exercised in soliciting the customer's correct taxpayer identification number.

Due Diligence for Accounts in Existence Prior to January 1, 1984

While not mandatory, the regulations provide several alternatives to broker-dealers who wish to avoid the imposition of penalties by performing due diligence.

Alternative No.1 (Section A-5)

  • By December 31, 1983, a payor must send a separate mailing by first-class mail to any customer who has not previously certified under penalties of perjury that his taxpayer identification number is the correct number. This mailing must: (1) contain a notice which explains what a TIN is; (2) advise the payee of his obligation to provide a correct TIN to the member; (3) state that if the customer has not provided the member with the correct TIN that the customer may be subject to a $50 penalty and that any payments made to the customer may be subject to backup withholding commencing on January 1, 1984; and, (4) advise the customer on how to provide the member with a correct TIN. A sample notice is provided in Section A-7 of the regulations.
    If this alternative is chosen, the member must also provide a prepaid, postage reply envelope and a certification form on which the customer may make the appropriate certification. In this regard, the IRS has developed Form W-9 which members may rely upon to obtain a customer's TIN with the appropriate certification. (A copy of Form W-9 is enclosed in this notice). The regulations permit the use of substitute forms (Section A-10) which must provide for name, address, and TIN and appropriate space for the required certification.

Alternative No. 2

  • Section A-6 of the temporary regulations permit Association members to defer the separate mailing required under Alternative No. 1 provided that the following steps are undertaken. First, the separate mailing referred to under Alternative No. 1 would still be required by December 31, 1983. However, the mailing would be limited to only those accounts which have not furnished a TIN or who have furnished an obviously incorrect number. Second, the member would be permitted to send a mailing (which would not be required to be separate from other mail) to all other accounts which have not previously certified as to the accuracy of their TIN. This form would request the account to verify the accuracy of the TIN and provide for the appropriate certification under penalty of perjury that the TIN is correct. This mailing must also be made no later than December 31, 1983. If Alternative No. 2 is chosen, the member must send a follow-up separate mailing, no later than March 31, 1984, to all accounts which have not by that date certified the accuracy of their TIN's.

For accounts opened in December 1983 subsequent to the mailings described above, members will have until January 31, 1984, to send the required mailings.

Due diligence will be considered exercised even if an account fails to return the appropriate certification to the member. In this case, the member must continue to solicit the account in each year subsequent to 1983 until the account provides the appropriate certification. Annual solicitations need not be made in separate mailings (Section A-25).

Members are therefore advised that in the future, a Form W-9 or equivalent should be completed for all new accounts on a routine basis in order to avoid the costs of additional mailings or the implementation of backup withholding.

Special Rules for Accounts Opened After December 31, 1983

In order to avoid backup withholding with respect to accounts that are opened on or after January 1, 1984, a member, in addition to obtaining certification as to the accuracy of the TIN, must also obtain certification that the account is not already subject to backup withholding due to notification from the IRS of underreporting. To obtain this certification, a member may use Form W-9 or a substitute form as described in Section A-36 of the temporary regulations.

The regulations provide that if either cetifications are not provided, the member must initiate backup withholding on any dividend or interest payments only.

BACKUP WITHHOLDING

As previously noted, commencing January 1, 1984, a member must commence backup withholding on all reportable payments (including gross proceeds) if:

  • an account fails to provide a TIN; or,
  • if an account has an obviously incorrect TIN (e.g., the number provided does not contain the proper number of digits).

These are the only two conditions which would require backup withholding on all reportable payments including gross proceeds. Failure to obtain the required certification from pre-1984 accounts will not in and of itself result in backup withholding so long as the number is provided and is not obviously incorrect.

Backup withholding will be required, however, only on reportable dividend and interest payments for "post-1983" accounts if the account has not certified as to the accuracy of its TIN or has not certified that it is not subject to backup withholding due to underreporting. Naturally, if a "post-1983" account has a missing or obviously incorrect TIN, backup withholding would be required on all reportable payments.

Accounts Exempt from Backup Withholding

Those accounts previously exempt from the withholding under the now repealed withholding regulations continue to be classified under the temporary regulations as "exempt recipients" for purposes of backup withholding. These accounts include:

  • a corporation;
  • a financial institution;
  • an organization exempt from tax under Section 501(a), or an individual retirement plan;
  • the United States or any agency or instrumentality thereof;
  • a state, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof;
  • a foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof;
  • an international organization or any agency or instrumentality thereof;
  • a registered dealer in securities or commodities registered in the U.S. or a possession of the U.S;
  • a real estate investment trust;
  • a common trust fund operated by a bank;
  • an exempt charitable remainder trust, or a non-exempt trust;
  • an entity registered at all times under the Investment Company Act of 1940; or,
  • a foreign central bank of issue.

Since these types of accounts are not subject to backup withholding, they are also exempt from the mailings described in the due diligence provisions noted above.

Payments of dividends not generally subject to backup withholding include the following:

  • Payments to nonresident aliens subject to withholding under Section 1441;
  • Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner;
  • Payments of patronage dividends where the amount received is not paid in money;
  • Payments made by certain foreign organizations.

Payments of interest not generally subject to backup withholding include the following:

  • Payments of interest on obligations issued by individuals;
  • Payments of tax-exempt interest;
  • Payments to nonresident aliens;
  • Payments on tax-free convenant bonds;
  • Payments made by certain foreign organizations;

Special Rules for Broker-Dealers

Special rules also apply to members who hold securities in safekeeping which are registered in the customer's name (Section A-41), i.e., the member is not the payor on the instrument. These rules apply to "post-1983" accounts and provide that the member must:

  • obtain the required certifications on the account;
  • furnish the TIN to the actual payor; and,
  • notify the payor to impose backup withholding if either of the required certifications are not provided.

For purposes of this section, a "post-1983" account is defined as one which was either established on or after January 1, 1984, or was established during 1983 but was inactive. For any account which is not a "post-1983" account and the broker is not the payor of the instrument, the member's only obligation is to provide the account's TIN to the payor unless the member has already been put on notice by the IRS that the account is subject to backup withholding.

* * * *

The full text of the temporary regulations is attached to this notice. It is anticipated that final regulations will be issued shortly. Members will be advised of publication of the final regulations as soon as possible and will also be informed of any material differences from the temporary regulations.

Efforts are currently underway by the Securities Industry Association and others to seek a delay in the implementation of the backup withholding provisions. Chances of obtaining such a delay, however, are uncertain. Members should, therefore, already be in the process of gearing up their operations to accommodate these regulations.

Members who employ outside service bureaus for recordkeeping purposes are urged to contact these agencies to ensure that systems will be developed to comply with these requirements.

The Association, as a service to its members, has established a liaison with the Internal Revenue Service in an attempt to facilitate the receipt of answers to questions which might arise in attempting to comply with these regulations. In this regard, the Association will attempt to assist members in obtaining clarification of the various provisions of the regulations from the IRS.

Members who are seeking formal rulings or requesting interpretations of the tax laws are advised that the IRS is prohibited from issuing rulings to business, or trade associations concerning the application of tax laws to members of a group and therefore, should proceed to contact the IRS directly for such rulings.

Please direct any questions concerning the temporary regulations or any questions concerning this notice to James M. Cangiano, Associate Director, Department of Policy Research (202) 728-8273.

Sincerely,

Gordon S. Macklin
President

Attachments

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 35a

[T.D. 7916]

Due diligence and certification requirements with respect to taxpayer identification numbers and backup withholding

AGENCY: Internal Revenue Service, Treasury.

ACTION: Temporary regulations.

SUMMARY: This document provides temporary regulations relating to the due diligence and certification requirements with respect to taxpayer identification numbers and backup withholding. Changes to the applicable tax law were made by the Interest and Dividend Tax Compliance Act of 1983 (Pub, L. 98-67, 97 Stat. 369). These regulations affect payors and payees of reportable interest, dividends, and patronage dividends and brokers and provide them with the guidance necessary to comply with the law.

DATE: The temporary regulations are effective for payments made after December 31, 1983.

FOR FURTHER INFORMATION CONTACT: Diane Kroupa of the Legislation and Regulations Division of the Office of Chief Counsel, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington, D.C. 20224 (202-566-3829).

SUPPLEMENTARY INFORMATION:

Background

This document contains temporary regulations relating to the due diligence and certification requirements of payors and payees of reportable interest, dividends and patronage dividends and brokers. Section 3406 was added to the Internal Revenue Code of 1954 by section 104 of the Interest and Dividend Tax Compliance Act of 1983 (Pub. L. 98-67, 97 Stat. 371), and section 6676 of the Code was amended by section 105 of the Act (Pub. L. 98-67, 97 Stat. 380).) As these provisions are generally effective for payments made after December 31, 1983, there is a need for immediate guidance so that payors and payees can make preparations to comply with these provisions. A new Part 35a, Temporary Employment Tax Regulations under the Interest and Dividend Tax Compliance Act of 1983, is added by this document to Title 26 of the Code of Federal Regulations.

It is expected that further temporary regulations with a cross-reference to a notice of proposed rulemaking will be published in the near future containing additional rules relating to backup withholding. The temporary regulations contained in this document will remain in effect until superseded by final regulations on this subject.

These temporary regulations, presented in question and answer format, are intended to provide guidelines upon which payors and payees of reportable interest, dividend, and patronage dividend payments may rely in order to resolve questions specifically set forth herein. However, no inference should be drawn regarding issues not raised herein or reasons certain questions, and not others, are included in these regulations.

Nonapplicability of Executive Order 12291

The Treasury Department has determined that these temporary regulations are not subject to review under Executive Order 12291 or the Treasury and OMB implementation of the Order dated April 29, 1983.

Regulatory Flexibility Act

No general notice of proposed rulemaking is required by 5 U.S.C. 533(b) for temporary regulations. Accordingly, the Regulatory Flexibility Act does not apply and no Regulatory Flexibility Analysis is required for this rule.

Drafting Information

The principal author of these regulations is Diane Kroupa of the Legislation and Regulations Division of the Office of the Chief Counsel, Internal Revenue Service. However, personnel from other offices of the Internal Revenue Service and the Treasury Department participated in developing the regulations on matters of both substance and style.

List of Subjects in 26 CFR Part 35a

Employment taxes, Income taxes, Backup withholding, Interest and Dividend Tax Compliance Act of 1983

Adoption of amendments to the regulations

Accordingly, a new Part 35a consisting of § 35a.9999-l is added to Title 26 of the Code of Federal Regulations. The new provision reads as follows:

PART 35a—TEMPORARY EMPLOYMENT TAX REGULATIONS UNDER THE INTEREST AND DIVIDEND TAX COMPLIANCE ACT OF 1983

§ 35a.9999-1 Questions and answers concerning the due diligence requirement and the certification requirements in connection with backup withholding and other related issues.

The following questions and answers principally concern the due diligence exception to the penalty on payors of reportable interest or dividend payments for failure to provide the payee's correct taxpayer identification number on certain information returns and the certification requirements in connection with backup withholding under the Interest and Dividend Tax Compliance Act of 1983 (Pub. L. 98-67, 97 Stat. 369):

In general

Q-l. What payors are subject to the new due diligence requirement with respect to their obligation to provide payees' correct taxpayer identification numbers on information returns?
A-l. Payors of reportable interest or dividend payments are subject to the new due diligence requirement.
Q-2. What is a reportable interest or dividend payment?
A-2. A reportable interest or dividend payment is a payment of interest, dividends, or patronage dividends that is of a kind, and to a payee, that is subject to information reporting.

Imposition of penalty for failure to provide a correct taxpayer identification number

Q-3. Is a payor subject to a penalty for failure to provide a correct taxpayer Identification number on an information return with respect to a reportable interest or dividend payment if the payee has certified, under penalties of perjury, that the taxpayer identification number furnished to the payor is the payee's correct number, the payor provided that number on an information return, and the number is later determined not to be the payee's correct number?
A-3. No. A payor is not subject to a penalty for failure to provide the payee's correct taxpayer identification number on an information return, if the payee has certified, under penalties of perjury, that the taxpayer identification number provided to the payor was his correct number, and the payor included such number on the information return.
Q-4. Is a payor subject to a penalty for failure to provide a correct taxpayer identification number on an information return if the payee does not certify, under penalties of perjury, that the taxpayer identification number provided to the payor is correct, and the number is later determined not to be the payee's correct number?
A-4. A payor is subject to a penalty if the taxpayer identification number of a payee provided on an information return is determined not to be the payee's correct number, unless the payor exercised due diligence in soliciting the payee's correct taxpayer identification number and in furnishing such number on the information return.

Due diligence defined for pre-1984 accounts and instruments

Q-5. In order for a payor of a reportable interest or dividend payment to be considered to have exercised due diligence in furnishing the correct taxpayer identification number of a payee with respect to a pre-1984 account or instrument, what actions must the payor take?
A-5. First, by the applicable date provided in A-6, the payor must send a separate mailing by first-class mail to any payee who has not previously certified, under penalties of perjury, that the taxpayer identification number furnished to the payor is the payee's correct number. This mailing must contain a notice that: (1) Informs the payee what a taxpayer identification number is, (2) advises the payee that he must provide a correct taxpayer identification number to the payor, (3) states that if the payee has not furnished a correct taxpayer identification number to the payor the payee may be subject to a $50 penalty and that payments to the payee may be subject to backup withholding starting on January 1, 1984, and (4) advises the payee how to provide a correct taxpayer identification number to the payor. The form of the notice is described in A-7. The payor must also include in the mailing a postage-prepaid reply envelope and a certification form on which the payee may certify, under penalties of perjury, that he is furnishing his correct taxpayer identification number to the payor. The specific requirements for the form of this certification are set forth in A-9 and A-10.
Second, in the case of a pre-1984 account or instrument for which the payee has provided no taxpayer identification number br for which the taxpayer identification number provided is obviously incorrect (i.e., contains an incorrect number of digits), the payor must have commenced backup withholding on payments made after December 31, 1983.
Third, the payor must use the same care in processing taxpayer identification numbers provided by payees that a reasonably prudent payor would use in the course of the payor's business in handling account information, such as account numbers and account balances.
Fourth, the payor must send a mailing in each year subsequent to 1983 to payees who have not by that time provided a taxpayer identification number under penalties of perjury. This mailing need not be sent separately from other mail to the payee. This mailing also need not contain a postage-prepaid reply envelope. The payor is required to process responses to this mailing in the same manner described in the preceding paragraph.
Q-6. In order to be considered to have exercised due diligence in soliciting the payee's taxpayer identification number, by what date must the payor send the separate mailing described in A-5 to a payee who has not previously provided his correct taxpayer identification number to the payor under penalties of perjury?
A-6. The separate mailing must be made on or before December 31, 1983, unless the payor complies with the alternative procedure set forth in the following two paragraphs.
A payor may defer the separate mailing referred to above, Provided, That the payor: (1) Sends a separate mailing by December 31, 1983, to all payees who have not furnished a taxpayer identification number to the payor or who have furnished an obviously incorrect number; (2) sends a mailing, which need not be separate from other mail, on or before December 31, 1983, to all other payees who have not previously provided their taxpayer identification numbers to the payor under penalties of perjury; and (3) sends, on or before March 31, 1984, a separate mailing to all payees who have not by that date certified under penalties of perjury that their taxpayer identification numbers provided to the payor are correct.
The separate and nonseparate mailing required in 1983 and the separate mailing required on or before March 31, 1984, must include the notice, certification form, and postage-prepaid reply envelope as required in A-5. Any separate mailing made in 1984 pursuant to the prior paragraph does not replace a 1984 nonseparate mailing that is otherwise required by the fourth paragraph of A-5.
Q-7. In what form should the payor notify the payee of the information set forth in A-5 and solicit the payee's correct taxpayer identification number, in order to satisfy the due diligence requirement with respect to a pre-1984 account or instrument?
A-7. The notice will satisfy the requirement of A-5 if it is conspicuous and contains language substantially similar to the following:

Important New Tax Information

Under the Federal income tax law, you are subject to certain penalties as well as withholding of tax at a 20 percent rate if you have not provided us with your correct social security number or other taxpayer identification number. Please read this notice carefully.

You (as a payee) are required by law to provide us (as payor) with your correct taxpayer identification number. If you are an individual, your taxpayer identification number is your social security number. If you have not provided us with your correct taxpayer identification number, you may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, interest, dividends, and other payments that we make to you may be subject to backup withholding starting on January 1, 1984.

Backup withholding is different from the 10 percent withholding on interest and dividends that was repealed in 1983. If backup withholding applies, a payor is required to withhold 20 percent of interest, dividends, and other payments made to you. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained.

Enclosed is a postage-prepaid reply envelope in which you may return the enclosed form to furnish us your correct name and taxpayer identification number. Please sign the form and return to us.

Q-8. In order to be considered to have exercised due diligence, is a payor required to request the payee to return the form certifying that the taxpayer identification number provided to the payor is correct?
A-8. The payor may request the payee to sign and return the form irrespective of whether the taxpayer identification number shown for the payee is the payee's correct taxpayer identification number. Alternatively, the payor may request that the payee return the form only in the event that the taxpayer identification number shown for the payee is incorrect, or if no taxpayer identification number is shown. If the payor uses the alternative instruction described in the preceding sentence, the payor may make suitable changes to the last paragraph of the notice prescribed in A-7.
If, however, the payee does not return the form certifying his taxpayer identification number under penalties of perjury, the payor is required in each subsequent year to request the payee to provide his correct taxpayer identification number under penalties of perjury (until the payee so certifies his taxpayer identification number).
Q-9. What form may the payee use to certify that the taxpayer identification lumber provided to the payor is correct?
A-9. The Internal Revenue Service is currently preparing Form W-9 on which a payee may certify his taxpayer identification number under penalties of perjury. Form W-9 will be available in mid October upon request to any Internal Revenue Service district director.
Q-10. May a payor use a substitute form instead of Form W-9 for a payee to certify, under penalties of perjury, that the taxpayer identification number provided to the payor is correct?
A-10. Yes. A substitute form must include space for the payee to provide his name, address, and taxpayer identification number. The form also must include space for the payee to certify under penalties of perjury that he is furnishing his correct taxpayer identification number to the payor. The wording of the certification must be substantially similar to the following: "Under penalties of perjury, I certify that the number shown on this form is my correct taxpayer identification number." If a payor uses a substitute form, the payor must provide either the Internal Revenue Service's instructions for Form W-9 or the substance of those instructions on or with the substitute form.
Q-11. In order to satisfy the due diligence requirement for pre-1984 accounts and instruments, is a payor required to send the mailing or mailings described in A-5 and A-6 to a payee who has previously furnished a taxpayer identification number to the payor, but who has not certified under penalties of perjury that the number provided to the payor is his correct taxpayer identification number?
A-11. Yes. A payor must send the mailing or mailings as required in A-5 and A-6 to any payee of a reportable interest or dividend payment who has not previously certified under penalties of perjury that the taxpayer identification number provided to the payor is the payee's correct number.
Q-12. May a payor satisfy the due diligence requirement by sending the separate mailings described in A-5 and A-6 with other mail the payor sends to the payee?
A-12. No. The separate mailing soliciting a certificate providing the payee's correct taxpayer identification number under penalties of perjury must not include any other communication to the payee. No material may be included in the separate mailing to the payee other than the notice, certification form and instructions, and postage-prepaid reply envelope.
Q-13. What action must a payor take with respect to accounts opened, or instruments acquired, subsequent to the date on which the payor prepares its list of payees for a mailing required in 1983 but prior to January 1, 1984?
A-13. The payor is required to send the mailing otherwise required to be made by December 31, 1983, to the payees of such accounts and instruments not later than January 31, 1984, unless the payee has previously provided his taxpayer identification number to the payor under penalties of perjury.
Q-14. If a payor makes no reportable interest or dividend payments to a payee with respect to an account or instrument during 1983, so that the payor is not required to make a 1983 information return with respect to the payee, is the payor nevertheless required to send the mailing or mailings to the payee as provided in A-5 and A-6?
A-14. The payor must either: (1) Send the mailing or mailings in the manner and within the time periods provided in A-5 and A-6 or (2) send the separate mailing described in A-5 to the payee not later than October 1 of the year in which a payment to the payee with respect to the account or instrument first becomes reportable, or, if later, within 30 days after such reportable payment occurs. Thus, if payments to the payee aggregate less than $10 in 1983, so that no 1983 information return is required, the payor need not make the mailing or mailings described in A-5 and A-6 within the time period provided in A-6; the payor must, however, make the separate mailing described in A-5 to the payee in the first year that payments to the payee aggregate $10 or more.
Q-15. If the payor has obtained a certificate, signed under penalties of perjury, setting forth the payee's taxpayer identification number within the applicable time period in A-6, must the payor nevertheless make the mailing or mailings described in A-5 and A-6 to the payee in order to be considered to have exercised due diligence in obtaining the payee's correct taxpayer identification number?
A-15. No. The mailing requirement applies only to a payee from whom the payor has not previously received a taxpayer identification number certified under penalties of perjury.
Q-16. May a payor obtain the form containing the payee's taxpayer identification number, signed under penalties of perjury, through a solicitation for such certification, in addition to the mailing or mailings required by A-5 and A-6, contained in a regular mailing to the payor's customers?
A-16. Yes. Such a certification may be obtained by a solicitation contained in a regular business mailing, by a request in person to a payee, or otherwise.

Special rules relating to the due diligence requirement for pre-1984 accounts and instruments

Q-17. Is a payor considered to have exercised due diligence in soliciting the correct taxpayer identification number with respect to pre-1984 accounts and instruments if the payor sends the required mailings to the last known address of the payee?
A-17. Yes.
Q-18. Is a payor required to send the required mailing or mailings to a payee's last known address in a case where other mailings to that address have been returned to die payor because the address was incorrect and no new address has been provided to the payor?
A-18. No. In such a situation, the payor is required to handle the required mailings in the same manner that he handles other correspondence to the payee.
Q-19. Is a payor required to send the mailing or mailings to the payee of an account or instrument with respect to which there is currently a "do not mail" or a "stop mail hold" instruction pursuant to which the payor does not send any mail to the payee?
A-19. No. A payor must, however, handle all required mailings in the same manner that the payor handles other correspendence with the payee?
Q-20. Is a payor required to send mailings to all payees listed on a joint account or jointly held instrument?
A-20. No. A payor is required to send mailings only to the first person listed on an account or instrument because the taxpayer indentification number of that person is the one required to be provided on an information return.
Q-21. If a payor has a Form W-6 or W-7 exemption certificate, relating to the now-repealed 10 percent withholding on interest and dividends, signed by a payee, must the payor send the mailings to the payee?
A-21. Generally, yes. The Internal Revenue Service Forms W-6 and W-7 did not contain a certification, under penalties of perjury, that the taxpayer identification number furnished by the payee was correct. If, however, the payor utilized a substitute Form W-6 or W-7 on which a payee certified under penalties of perjury in the manner provided on Form W-9 or in A-10 that the taxpayer identification number furnished to the payor was the payee's correct number, the payor is not required to send mailings to the payee.
Q-22. Is a payor of reportable interest or dividends required to send mailings to a corporation or other exempt recipient?
A-22. No. A payment of interest to a corporation or other exempt recipient described in § 1.6049-4(c)(l)(ii) of the Income Tax Regulations generally is not subject to information reporting. Thus, mailings to such recipients are not required. Although a payment of dividends or patronage dividends to a corporation and certain other exempt recipients generally is subject to information reporting, payors are not required to send mailings to persons described in § 31.3452(c)-l (b) through (p) of the Income Tax Regulations in order to satisfy the due diligence requirement. A payee shall be considered an exempt recipient for the purpose of this rule if (1) the payee could be treated as an exempt recipient without the requirement of filing an exemption certificate under § 31.3452(c)-1 (b) through (p) of the Income Tax Regulations or (2) the payee has provided the payor with a certificate, signed under penalties of perjury, stating that the payee is an exempt recipient described in one or more paragraphs of § 31.3452(c)-l (b) through (p) of the Income Tax Regulations. Form W-9 may be used for the purpose of making this certification. Alternatively, the payor may provide the payee with a substitute form for such certification, provided that the form conforms generally to Form W-9 and the instructions related to exempt recipients.
Q-23. Is a payor required to send mailings to a payee with respect to an account established under the Uniform Gift to Minors Act?
A-23. Yes. The law requires that the social security number of the minor be provided to the payor with respect to accounts established under the Uniform Gift to Minors Act. If the miner does not have a social security number, the minor may obtain one by filing a Form SS-5 with a Social Security Administration Office. The form certifying that the minor's social security number provided is correct may be signed by the custodian of the Uniform Gift to Minors Act account.
Q-24. Is a payor required to send mailings to a payee where the account is held as a club account, bowling league account, recreation account, or other informal account?
A-24. Yes. The law requires that the taxpayer identification number of the organization be provided to the payor. If the club, league, or other informal association does not have an employer identification number, one may be obtained by filing a Form SS-4 with an Internal Revenue Service Center.
Q-25. Must the payee sign and return to the payor the form certifying the payee's correct taxpayer identification number under penalties of perjury in order for the payor to satisy the due diligence requirement?
A-25. No. The determination of whether the payor exercised due diligence in soliciting the payee's correct taxpayer identification number does not depend upon whether the payee signs and returns the form certifying his correct taxpayer identification number. If, however, the payee does not provide his taxpayer identification number to the payor under penalties of perjury, the payor is required to continue to solicit a certified taxpayer identification number from the payee in each year subsequent to 1983 until the payee has provided a certified taxpayer identification number. Such subsequent annual solicitations need not be made, however, in a separate mailing.

Requirement of backup withholding

Q-26. If a payee does not provide a taxpayer identification number to the payor what action is a payor required to take?
A-26. Starting January 1, 1984, the payor is required to commence backup withholding with respect to reportable payments to payees who have not provided a taxpayer identification number to the payor. If an individual payee does not have a social security number, he may obtain one by filing Form SS-5 with a Social Security Administration Office. Other payees may obtain an employer identification number by filing Form SS-4 with an Internal Revenue Service Center.
Q-27. Is a payor of reportable interest or dividends required to impose backup withholding with respect to payments made after December 31, 1983, to a payee of an account that existed, or an instrument that was held by the payee, on December 31, 1983, if the payee has not provided the payor with a written certification under penalties of perjury that the taxpayer identification number furnished is correct?
A-27. No. A payor of reportable interest or dividends that are paid with respect to an account or instrument existing on December 31, 1983, is not required to impose backup withholding starting on January 1, 1984, simply because the payee has failed to certify his taxpayer identification number under penalties of perjury.
Q-28. Is a payor required to impose backup withholding with respect to a reportable interest or dividend payment made on or after January 1, 1984, if the taxpayer identification number furnished by the payee does not contain the proper number of digits?
A-28. Yes. A payor shall treat the payee as having failed to furnish a taxpayer identification number if the number provided does not contain the proper number of digits. The proper number of digits is nine for both the social security number and the employer identification number.
Q-29. Is a payor of reportable interest or dividend payments required to impose backup withholding on a payment made to an exempt recipient?
A-29. No. A payor is not required to withhold on a payment made to a person described in § 31.3452(c)-l (b) through (p) of the Income Tax Regulations. A payee shall be considered an exempt recipient for purposes of this rule if (1) he may be treated as an exempt recipient without the requirement of filing an exemption certificate under the cited regulation or (2) the payee has provided the payor with a certificate, signed under penalties of perjury, stating that a payee is an exempt recipient described in one or more paragraphs of the cited regulation. Form W-9 may be used for the purpose of making this certification. Alternatively, the payor may provide the payee with a substitute form for such certification, provided that the substitute form conforms generally to Form W-9 and the instructions related to exempt recipients. A payor may in any case require an exempt recipient not otherwise required to file a certificate as to his status as an exempt recipient to file such a certificate, and may treat an exempt recipient who fails to file such a certificate as a person who is not exempt. A payor may require a separate certificate for each account or instrument maintained by an exempt recipient. A payor may require that any certification that a payee is an exempt recipient be made only on the substitute form provided by the payor; in that case, the payor must comply with the pertinent portions of § 31.3452(f)-l(b)(2) of the Income Tax Regulations relating to the procedures that a payor must follow upon receipt of an unacceptable form.
Q-30. Is a payor required to impose backup withholding on a pension or annuity distribution made on or after January 1, 1984, if the payee has not provided his taxpayer identification number to the payor?
A-30. If pension withholding under section 3405 applies to a pension or annuity distribution and the payee does not make an election not to have pension withholding apply under that section, backup withholding does not apply. If, however, the payee makes such election under section 3405 or pension withholding does not otherwise apply, and the payee does not provide his taxpayer identification number to the payor (or the taxpayer identification number provided is obviously incorrect), the payor is required to withhold 20 percent of any payment to the payee to which section 6041 applies, unless the conditions of the following paragraph are satisfied.
If the annual distributions to a payee total $5,400 or less (in which case withholding under section 3405 generally is not required), and if the payor has no social security number for the payee (or the social security number provided is obviously incorrect), the payor shall not impose backup withholding until the first payment made after June 30, 1984. By that date, the payee will have been able to obtain a social security number and provide it to the payor, in which case no amounts will be withheld.
Q-31. In determining whether a payee has failed to provide a taxpayer identification number with respect to an account that was in existence or an instrument held on December 31, 1983, so that backup withholding is imposed starting January 1, 1984, within what period of time just a taxpayer identification number provided by a payee be treated as having been received?
A-31. A payor must process a taxpayer identification number within 30 days after the payor receives the taxpayer identification number from the payee. Thus, for example, if a payor has no taxpayer identification number for a payee, and the payee provides his taxpayer identification number to the payor on December 15, 1983, the payor must process the number not later than January 14, 1984. As a result, the payor would be authorized to commence backup withholding with respect to payments made to the payee commencing January 1, 1984, but backup withholding must cease by January 14, 1984. The payor also is authorized to treat the taxpayer identification number as having been received at any time after it is provided, so that backup withholding need not be commenced in the circumstance outlined above.

Certification requirements for accounts opened and instruments acquired after 1383

Q-32. What actions must a payor take with respect to accounts that are opened or instruments acquired on or after January 1, 1984, in order to avoid imposing backup withholding on reportable interest or dividend payments?
A-32. In order to avoid imposing backup withholding with respect to accounts that are opened or instruments acquired on or after January 1, 1984, a payor of reportable interest or dividend payments must obtain a certification from the payee, signed under penalties of perjury, (1) that the taxpayer identification number provided to the payor is the payee's correct number and (2) that the payee is not subject to backup withholding due to notified payee underreporting. The form for these certifications is prescribed in A-35 and A-36.
Q-33. What payees can make the certification that they are not subject to backup withholding due to notified payee underreporting?
A-33. Any payee who has not been notified that he is subject to backup withholding as a result of notified payee underreporting can make the certification under the law. In addition, a payee who was subject to backup withholding due to notified payee underreporting may certify that he is not subject to backup withholding due to notified payee underreporting if the Service has provided the payee with written certification that backup withholding due to notified payee underreporting has terminated.
Q-34. Under what circumstances will an account be considered to have been in existence, or an instrument be considered to have been held, before January 1, 1984 (a "pre-1984 account")?
A-34. An account that is in existence before January 1, 1984, will be considered a pre-1984 account, irrespective of whether additional deposits are made to the account on or after January 1, 1984. In addition, if shares of a corporation are held before January 1, 1984 (or considered held before such date by operation of this rule), and additional shares are received by the holder, irrespective of whether such shares are received by reason of a stock dividend, as a result of an infusion of new cash, or otherwise, the new shares received will be considered a pre-1984 account, in the discretion of the payor. Where an account is opened, or an instrument is acquired automatically on the maturity or termination of an account that was in existence or instrument held before January 1, 1984 (or considered to have been in existence or held before such date by operation of this rule), without the participation of the payee, the new account or instrument will be considered a pre-1984 account, in the discretion of the payor. For purposes of the preceding sentence, a payee shall not be considered to have participated in the acquisition of the new account or instrument solely by reason of the failure to exercise a right to withdraw funds on maturity or termination of the old account or instrument. Where a discount instrument with a maturity not exceeding one year (a "short-term instrument") is acquired upon the maturity of a short-term instrument, the participation of the payee in the acquisition of the newly-acquired instrument shall not be taken into account, and the new instrument shall be considered to have been acquired automatically, with' respect to instruments acquired prior to January 1, 1985. In the case of insurance policies in effect on December 31, 1983, the election of a dividend accumulation option pursuant to which interest is paid, or the creation of an "account" in which proceeds of a policy are held for the policy beneficiary, may, in the payor's discretion, be treated as a pre-1984 account.
Q-35. What form may a payee of reportable interest or dividends use to certify under penalties of perjury, that the taxpayer identification number provided to the payor is correct and that he is not subject to backup withhholding due to notified payee underreporting?
A-35. A payee may use Internal Revenue Service Form W-9 for both required certifications.
Q-36. May a payor of reportable interest or dividends or a broker provide a substitute form for a payee to certify under penalties of perjury that his taxpayer identification number is correct and that he is not subject to backup withholding due to notified payee underreporting?
A-36. Yes. A payor or broker may use a substitute form provided the language of the certification is substantially similar to the following: "Under penalties of perjury, I certify (1) that the number shown on this form is my correct taxpayer identification number and (2) that I am not subject to backup withholding either because I have not been notified that I am subject to backup withholding as a result of a failure to report all interest or dividends, or the Internal Revenue Service has notified me that I am no longer subject to backup withholding." A payor or broker may use separate substitute forms to have the payee certify under penalties of perjury that (i) his taxpayer identification number is correct, provided the language is substantially similar to the certification in A-10 and (ii) he is not subject to backup withholding due to notified payee underreporting provided the language is substantially similar to clause (2) of the preceding sentence. A payor or broker also may incorporate both required certifications into other business forms, customarily used, such as account signature cards, provided the required certifications are clearly set forth.
If a payor or broker uses a single substitute form for both certifications, which does not follow the Form W-9 format, the form must contain an instruction to the payee that he must strike out the language certifying that the payee is not subject to backup withholding due to notified payee underreporting if he has been notified that he is subject to backup withholding due to notified payee underreporting, and the payee has not received a notice from the Internal Revenue Service advising him that backup withholding has terminated. If the payor or broker requires that the payee make the certification on a substitute form provided by the payor, the payor or broker may refuse to accept certifications (including certifications provided on Form W-9) that are not made on the form or forms provided by the payor or broker. If the payor or broker refuses to accept the form provided by the payee, the payor or broker then must comply with the pertinent portions of § 31.3452(f)-l(b){2) of the Income Tax Regulations related to the procedures that a payor must follow upon receipt of an unacceptable form.
Q-37. With respect to reportable interest or dividends that are paid on an account opened or an instrument acquired on or after January 1, 1984, if a payee fails to certify, under penalties of perjury, (1) that the number furnished is his correct taxpayer identification number, and (2) that he is not subject to backup withholding due to notified payee underreporting, what action is a payor required to take?
A-37. A payor is required to withhold 20 percent of any reportable interest or dividend payment on such an account or instrument if either of the certifications specified is not provided.
Q-38. Is a payor ever required to withhold more than 20 percent of a payment?
Q-38. No. Irrespective of how many conditions exist which cause backup withholding to apply, a payor is required to withhold only 20 percent of a payment until all of the conditions no longer apply.
Q-39. Is a payer required to send a notice to the payee when the payor commences backup withholding?
Q-39. In general, no. However, a payor of a readily tradable instrument that is not acquired directly from the payor must notify the payee that backup withholding has commenced, or will commence. The notice must be sent to the payee not later than 15 days after the payor makes the first payment to the payee that is subject to backup withholding. The notice must explain the steps the payee must take to stop backup withholding. The text of this notice will be provided in a regulation to be issued in the near future.
Q-40. Do special rules apply to payments made with respect to readily tradable instruments?
A-40. Yes. Special backup withholding rules apply with regard to readily tradable instruments when (1) the payee did not acquire the instrument directly from the issuer of the instrument and (2) a broker does-not hold the instrument as nominee for the payee (i.e., in street name). Under the special rules, a payor is required to impose backup withholding only if (1) the payor does not receive the payee's taxpayer identification number, or (2) the payor is notified by a broker that the payee failed to make the required certifications (described in A-32) to the broker and the payee did not make the certifications- to the payor. When the payee acquires the instrument directly from the issuer of the instrument or when a broker holds the instrument as nominee for the payee, the rules applicable to payors apply.
Q-41. What rules apply to brokers?
A-41. When a broker is a payor (i.e., the broker holds the instrument in street name), the regular rules for payors apply. If a broker is not the payor with respect to an instrument, different rules apply to the broker depending on whether the payee's account with the broker is treated as a "post-1983 account"
A "post-1983 account" is any account other than an account established prior to January 1, 1984, through which, during 1983, the broker either bought or sold an instrument for the payee or acted as nominee for the payee. (Both the determinations of (1) whether an account or instrument is treated as a post-1983 account of the payor for purposes of the payor's due diligence requirements (see A-34) and (2) when backup withholding applies to an instrument are made without regard to whether the instrument is acquired through a post-1983 account of a broker.)
When a readily tradable instrument is acquired through a "post-1983 account" and the broker is not the payor of the instrument, the broker must (1) obtain the certifications (described in A-32) from the payee but only once with respect to each account, (2) furnish the payee's taxpayer identification number to the payor, and (3) notify the payor to impose backup withholding if the payee failed to make either of the required certifications to the broker. The broker is required to give the information required by clauses (2) and (3) of the prior sentence to the payor in connection with the transfer instructions for the acquisition. The notice under clause (3) shall state that: "The [named payee] is subject to backup withholding under sections 3406(a)(l)(A), 3406(a)(l)(B), 3406(a)(l)(C), or 3406(a)(l)(D) of the Internal Revenue Code [circle whichever section applies]." A magnetic media, machine readable, or other similar notice substantially to the same effect also may be employed. After the transfer instructions are transmitted, the broker is not required to seek a missing' taxpayer identification number or missing certification or to give any further notices with regard to the' acquisition of the instrument.
When a readily tradable instrument is acquired through an account that is not a "post-1983 account" and the broker is not the payor of the instrument, the broker's sole responsibility is to furnish the payee's taxpayer identification number to the payor (unless the broker has been notified that the payee is subject to backup withholding under section 3406 (a)(l)(B) or (a)(l)(C) of the Internal Revenue Code).

Window transactions

Q-42. Is a payor required to exercise due diligence in soliciting the taxpayer identification number of a payee with respect to the following payments ("window transactions"): Redemptions of United States savings bonds, and payments upon interest coupons, Treasury bills, commercial paper, and banker's acceptances?
A-42. No. The due diligence requirements do not apply to such payments. Thus, the certification requirements set forth in A-32 do not apply to such transactions. A payor is required to withhold 20 percent with respect to such payments only if the payee does not provide his taxpayer identification number to the payor. Payors remain obligated, however, to make an information return with respect to window transactions.
Q-43. Will a payor be allowed to furnish an information return to the payee with respect to a window transaction at the time the obligation or instrument is presented?
A-43. Yes. A payor may furnish an information return to the payee at the time of the transaction or any time prior to January 31 of the year following the calendar year in which the transaction occurs. In general, however, the payor must provide information returns with respect to window transactions to the Internal Revenue Service on magnetic tape, in accordance with section 6011(e)(2) of the Internal Revenue Code, effective for transactions after December 31, 1983.

Separate Form 1099

Q-44. Is a payor of interest, dividends, or patronage dividends paid in 1983 required to send a separate official Form 1099 to a payee?
A-44. No. A payor of interest, dividends, or patronage dividends paid in 1983 is not required to send a separate official Form 1099 to a payee. A payor may satisfy his obligation to furnish the required statement to the recipient by sending the statement with other business correspondence to the payee, such as a monthly statement.
Q-45. Is a payor of interest, dividends, or patronage dividends paid after January 1, 1984, required to send a separate official Form 1099 to a payee?
A-45. Yes. For payments made in 1984 and subsequent years, a payor is required to provide an official Form 1099 to a payee either in a separate mailing or in person. Payors also may use a substitute Form 1099 which contains provisions substantially similar to those of the prescribed form if the payor complies with all revenue procedures relating to substitute Form 1099 in effect at the time.
Q-46. Is a payee required to attach Form 1099 to his tax return?
A-46. No.

Miscellaneous

Q-47. In what manner is a payor required to remit to the Internal Revenue Service amounts withheld from any reportable payment?
A-47. A payor must deposit amounts withheld under the backup withholding provisions with a Federal Reserve Bank or an authorized financial institution in accordance with the deposit rules of § 31.6302(c)-l(a)(l)(i) of the Income Tax Regulations that apply to an employer with respect to employment taxes. The payor of a reportable payment may elect, however, in accordance with the instructions provided with Form 941, to deposit such amounts separately from social security taxes and income tax withheld from wages. Thus, a payor may treat amounts withheld under section 3406 separately from amounts withheld from wages for purposes of determining when to remit the withheld amounts from any reportable payment. If, however, the payor elects to aggregate the amount withheld from wages with the amounts withheld under section 3406, the payor may do so. Regardless of the manner in which the payor elects to treat the withheld amounts for purposes of determining the time within which such amounts are required to be deposited, a payor must report the amounts withheld under section 3406 on the same Form 941 that the payor uses to report the employment taxes deposited.
Q-48. May a payor refuse to open an account for, or issue an instrument to a person on or after January 1, 1984, if the person fails to furnish his taxpayer identification number to the payor under penalties of perjury?
A-48. Yes. If the payor refuses to open an account or issue an instrument because the person fails to provide his taxpayer identification number under penalties of perjury, the payor will not be in violation of the Internal Revenue Code. If, however, the payor allows a person who has not provided his taxpayer identification number under penalties of perjury to open an account or acquire an instrument, the payor is required to impose backup withholding with respect to any interest or dividend payments thereafter made with respect to such account or instrument (unless the payee thereafter provides his taxpayer identification number certified under penalties of perjury). The payor is not permitted, however, to refuse to open an account or to issue an instrument if the payee fails to certify under penalties of perjury, that the payee is not subject to backup withholding due to notified payee underreporting.
Q-49. May a payor treat a certificate respecting a taxpayer identification number as valid if it is signed by a person other than the payee?
A-49. In certain instances, yes. A certificate may be signed by any person who, under the pertinent portions of sections 6061, 6062, 6063, and 6065 of the Internal Revenue Code and the regulations thereunder, is authorized to sign a declaration under penalties of perjury on behalf of the payee.
Q-50. What procedures must a payor follow in order to demonstrate that it has exercised due diligence in furnishing the correct taxpayer identification number of a payee, as required in A-5?
A-50. A payor is not required to retain a copy of the communication sent to each individual payee or to prove that the communication was sent to a particular payee. Instead, payors must establish the existence of procedures that are reasonably calculated to insure that each person required to receive a mailing as prescribed in A-5, in fact received such mailing, and that the payor exercised reasonable care in processing responses to such mailings.

Special rules for accounts, instruments and transactions of foreign persons

Q-51. Is a payor required to send the mailing or mailings described in A-5 and A-6 to foreign persons?
A-51. Generally no. A payor is required to send the mailing or mailings described in A-5 and A-6 to any payee to whom the payor makes a payment that is subject to information reporting. Generally, a payment of interest to a foreign person is not subject to information reporting. See §1.6049-5 (b) (2) and (3) of the Income tax Regulations for the procedures to determine whether a payee of interest is a foreign person. See § 1.6042-3(b) (1), 2, and (3) and § 1.6044-3(c) of the Income Tax Regulations concerning exceptions from the information reporting requirements for payments of dividends and patronage dividends by and to certain foreign persons.
Q-52. Is a payor required to send the mailing or mailings described in A-5 and A-6 to foreign persons with respect to pre-1984 accounts and instruments if payments on those accounts and instruments would not have been reportable payments but for the fact that the foreign person failed to provide the penalty of perjury statement described in § 1.6049-5(b)(2)(iv) of the Income Tax Regulations?
A-52. A payor need not send the mailing or mailings described in A-5 and A-6 to a payee who has not previously provided the penalty of perjury statement described in § 1.6049-5(b)(2)(iv) of the Income Tax Regulations if (1) the payor sends a separate mailing to the payee on or before December 31, 1983, requesting the required penalty of perjury statement and (2] the payor has evidence in its records that the payee is a foreign person (provided that the payor has no actual knowledge that such evidence is false). If the payor has sent a nonseparate mailing on or before December 31, 1983, requesting the required penalty of perjury statement, the payor may send the separate mailing referred to in clause (1) on or before March 31, 1984. The separate mailing, whether sent in 1983 or 1984, must be by first-class mail, or by airmail if sent to a foreign address, and must contain a notice describing the penalty of perjury statement set forth in § 1.6049-5(b)(2)(iv) and advising the payee that backup withholding may commence if the statement is not provided. The payor also must provide a reply envelope and a form on which the payee may make the statement described in § 1.6049-5{b)(2)(iv) under penalties of perjury. Neither the separate nor nonseparate mailing is required if the payor has received the required penalty of perjury statement from the payee.
The rules of A-18 and A-19 relating to a "do not mail" or "stop mail hold" instruction and to payees for whom the payor has no address, shall apply. The other evidence referred to in clause (2) above on which the payor may rely for treating a payee as a foreign person includes a written statement from the payee that he is neither a resident nor a citizen of the United States or an affidavit from an employee of the payor stating that he knows that, or the payee has represented orally that, he is a foreign person. The mere fact that the payee has provided an address outside the United States is insufficient evidence to establish that the payee is a foreign person for this purpose.
Q-53. Is a payor required to commence backup withholding on January 1, 1984, on payments with respect to accounts and instruments described fn A-52 if the foreign person failed to provide the penalty of perjury statement described in § 1.6049-5(b)(2)(iv) of the Income Tax Regulations?
A-53. The payor need not commence backup withholding with respect to such payments made before July 1, 1984, provided that the payor (1) made the separate mailing described in A-52 before December 31, 1983, or has made the nonseparate mailing described in A-52 before December 31, 1983, and sends a separate mailing to those payees who have not provided the required statement by March 31, 1984, and (2) has in its records the evidence described in A-52 that the payee is a foreign person.
Q-54. Do the backup withholding provisions apply to payments of interest within the United States by a payor that is an international organization or by a person acting in its capacity as a paying agent for such organization?
A-54. No, provided the international organization is in organization of which the United States is a member and which enjoys immunity or exemption from any liability or .obligation to pay, withhold, or collect tax pursuant to an international agreement having full force and effect in the United States.
Q-55. Is a broker required to impose backup withholding with respect to transactions effected for pre-1984 accounts if the customer is an exempt foreign person who fails to provide the broker with the penalty of perjury statement described in § 1.6045-l(g)(l). of the Income Tax Regulations?
A-55. With respect to such transactions effected before July 1, 1984, a broker is not required to impose backup withholding if (1) the broker sends a separate mailing to the customer on or before December 31, 1983, requesting the penalty of perjury statement described in § 1.6045-l(g)(l) of the Income Tax Regulations and (2) the broker has evidence in his records that the customer is a foreign person (provided that the broker has no actual knowledge that such evidence is false). If the payor sent a nonseparate mailing on or before December 31, 1983, requesting the required penalty of perjury statement, the payor may send the separate mailing on or before March 31, 1984. The separate mailing, whether made in 1983 or 1984, must be by first-class mail, or by airmail if sent to a foreign address, and must contain a notice describing the required penalty of perjury statement and advising the customer that backup withholding may commence if the statement is not provided. The broker must also include in the mailing a reply envelope and provide a form on which the customer may make the required penalty of perjury statement. Neither the separate nor nonseparate mailing is required if the payor has received the penalty of perjury statement from the customer.

The rules of A-18 and A-19 relating to "do not mail" or a "stop mail hold" instructions, and to payees for whom the payor has no address shall apply. The other evidence referred in clause (1) above on which the broker may rely for treating a customer as as foreign person may include a written statement from the customer that he is neither a resident nor a citizen of the United States or an affidavit from an employee of the broker stating that he knows that, or the customer has orally represented that, he is a foreign person. The mere fact that the customer has provided an address outside the United States is insufficient evidence to establish that the customer is a foreign person for this purpose.

There is a need for immediate guidance with respect to the provisions contained in this Treasury decision. For this reason, it is found impracticable to issue it with notice and public procedure under subsection (b) of section 553 of Title 5 of the United States Code or subject to the effective date limitation of subsection (d) of that section.

This Treasury decision is issued under the authority contained in section 3406 (a), (b), (c). (e), (g), (h), and (i), section 6042(a), section 6044(a), section 6045, section 6049 (a), (b), and (d), section 6103(q), section 6109, section 6302(c), section 6676, and section 7805 of the Internal Revenue Code of 1954 (97 Stat. 371, 372, 373, 376, 377, 378, 379; 26 U.S.C. 3406 (a), (b), (c), (e), (g), (h), and (i), 96 Stat. 587; 26 U.S.C. 6042(a), 96 Stat. 587; 26 U.S.C. 6044(a), 96 Stat. 600, 26 U.S.C. 6045, 96 Stat. 592, in sections 104 and 105 of the Interest and Dividend Tax Compliance Act of 1983 (97 Stat. 369, 371, and 380).

Roscoe L. Egger, Jr.,
Commissioner of Internal Revenue.

Approved: September 30, 1983.

John E. Chapoton,

Assistant Secretary of the Treasury.

[FR Doc. 83-27157 Filed 9-30-83: 3:52 pm]

BILLING CODE M30-01-M

Payer's Request for Taxpayer
Identification Number

PDF TO BE INCLUDED


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