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Used in the context of securities, the illegal practice of a public offering participant keeping some shares in a private account or with a family member, employee, or dealer to profit from the higher market price of a hot issue.
Used in the context of taxes, the withholding by an employer of a certain amount of an employee's income in order to cover the employee's tax liability. Also used to refer to the withholding by corporations and financial institutions of a flat 10% of interest and dividend payments due to security holders.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


The act or practice of not giving a certain percentage of money that otherwise belongs to a person. Withholding must occur in accordance with appropriate laws and may not be arbitrary. Withholding is most common in taxes, in which an employer retains a certain percentage of an employee's wages or salary and gives it to the IRS instead of the employee. Likewise, a manual rollover to an IRA is subject to a 20% withholding. Courts may order withholding for reasons such as child support or alimony. See also: Overwithholding.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


1. The holding back of a portion of wages, dividends, interest, pension payments, or various other sources of income for payment of taxes to the U.S. Treasury. See also backup withholding.
2. The illegal holding back of a portion of securities allocated as part of a new issue to a member of an underwriting syndicate. The underwriter may wish to keep the securities or resell them to a designated party so as to profit from an expected price rise soon after the issue has been offered to the public.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


Withholding is the amount that employers subtract from their employees' gross pay for a variety of taxes and benefits, including Social Security and Medicare taxes, federal and state income taxes, health insurance premiums, retirement savings, education savings, or flexible spending plan contributions, union dues, or prepaid transportation.

Contributions to tax-deferred savings plans are withheld from your pretax income, as are amounts you put into tax-free flexible spending and prepaid transportation accounts. Those amounts reduce the taxable salary that your employer reports to the IRS.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Domestic partnerships (or their authorized withholding agents) must withhold tax in accordance with Internal Revenue Code section 1446 on distributions made to foreign partners.
A withholding agent usually must withhold at the time of payment [Treasury Regulations section 1441.2(e)(1)].
* Scenario 2: Decreased utilization and withhold returned, resulting in an increase in revenue.
However, if Lundon chooses to withhold the tax the move could prove costly.
More material indicating the guilt of EPA officials in these matters was contained in the documents Olson wanted to withhold. Had the Justice Department been more vigilant about investigating the information it had, the question of withholding the documents would have been a very different one.
In lieu of proper documentation present at the time of payment, a withholding agent generally must withhold at the full statutory rates or risk liability for taxes, penalties, and interest.
All comments used in Feedback must be signed, but we will withhold names on request.
If an individual is treated as an employee, the employer is obligated to withhold social security and income taxes and pay all applicable employee benefits (health insurance, workmen's compensation insurance, retirement plans, etc.).
Withholding requirements: Generally, a transferee of a USRPI must withhold, report, and pay over to the IRS a tax under Sec.
As a general rule, a withholding agent must withhold 30% on U.S.-source outbound payments, unless the payee is entitled to relief under a treaty or statutory provision and the withholding agent receives a proper claim for reduced withholding (e.g., on a Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding) prior to payment.
1, people buying California real estate must withhold 3 1/3 percent of the sales price and send it to the FTB, to comply with AB 2065.
withholding agents to report and withhold on U.S.-source fixed or determinable annual or periodic (FDAP) income as a Large and Mid-Size Business (LMSB) Division Tier 1 issue.