Backup withholding is a federal tax withholding mechanism that may apply when certain reporting requirements are not met. One of the most common triggers for backup withholding is the absence of a valid Form W-9.
This page explains how backup withholding relates to Form W-9, when it applies, and why requesters are required to withhold tax in specific situations.
What Is Backup Withholding
Backup withholding is a requirement under U.S. tax law that obligates a payer to withhold federal income tax from certain reportable payments when proper taxpayer information has not been provided.
The withholding is applied by the requester or withholding agent, not by the Internal Revenue Service at the time of payment.
How Form W-9 Is Connected to Backup Withholding
Form W-9 is used to provide a taxpayer identification number (TIN) and certify U.S. taxpayer status. When a valid Form W-9 is not received, the requester generally cannot treat the payee as properly documented for reporting purposes.
As a result, backup withholding may be required on certain payments until the required information is provided.
For general context on the form itself, see IRS Form W-9 explained.
When Backup Withholding May Apply
Backup withholding may apply in situations such as:
- a taxpayer identification number is not provided;
- the provided TIN is incorrect according to IRS records;
- the payee fails to certify their status when required.
These conditions are based on statutory reporting and withholding rules and do not depend on whether the payee ultimately owes tax.
Backup Withholding Rate
When backup withholding applies, federal income tax is withheld at a fixed rate established by law.
The withholding continues until the issue that triggered backup withholding is resolved in accordance with IRS requirements, such as by providing a properly completed Form W-9.
Types of Payments Subject to Backup Withholding
Backup withholding applies only to certain reportable payments. Examples may include payments reported on information returns, such as nonemployee compensation or other reportable income.
Not all payments are subject to backup withholding, and the rules depend on the type of payment and the status of the payee.
Who Is Responsible for Backup Withholding
The obligation to apply backup withholding rests with the requester or withholding agent. If withholding is required and not applied, the requester may become liable for the amount that should have been withheld.
This responsibility exists regardless of whether the payee is aware that backup withholding applies.
How Backup Withholding Ends
Backup withholding generally ends when the requester receives valid documentation that satisfies IRS requirements.
In many cases, this involves receiving a properly completed and signed Form W-9.
Related Clarifications
Official Reference
For the official form and IRS-issued instructions, see the official Form W-9 reference.