The IRS has posted a January 2011 version of IRS Publication 1281, Backup Withholding for Missing and Incorrect Name/TIN(s), on its website. Payers are required to deduct backup withholding on certain nonwage payments made to payees for whom an information return was filed that had either a missing or incorrect taxpayer identification number (TIN). Payments that may be subject to backup withholding include commissions and nonemployee compensation. Payments that are excluded from backup withholding include distributions from Archer Medical Savings Accounts (MSAs), long-term care benefits, distributions from any retirement account, distributions from an employee stock ownership plan (ESOP), and unemployment compensation.
The publication also includes instructions for reading IRS tape cartridges, CDs, and DVDs. Employers will receive a CD if they have between 251 to 100,000 incorrect payee records. They will receive a DVD if they have over 100,000 incorrect payee records.
There are many frequently asked questions (FAQs) in IRS Publication 1281, including FAQs on IRS backup withholding notices. The backup withholding rate is 28% through Dec. 31, 2012.
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