Backup Withholding Rate

Backup Withholding Rate

The percentage of dividends, interest and other investment income one must pay if one fails to properly file one's tax identification number. The IRS informs companies and persons who are subject to backup withholding; this ensures the companies and persons pay the appropriate amount in taxes.
References in periodicals archive ?
102-486), which was signed by President Bush on October 24, includes among its revenue-raising provisions several changes to the tax treatment of transportation benefits, expenses for extended travel away from home, and the backup withholding rate. All these changes are effective for benefits provided and amounts paid on and after January 1, 1993.
102-486 increases the backup withholding rate to 31 percent (from 20 percent), effective for all amounts paid after December 31, 1992.[16] This rate increase obviously affects only payees in any cases where backup withholding has been timely applied, and the increased withholding taxes can be claimed by payees as credit against the federal taxes owed with respect to the payment.