Banks and other businesses that pay you certain kinds of income must file Form 1099, an information return, with the IRS. Although generally, these payments are not subject to wage withholding, they may be subject to backup withholding. Payments that may be subject to "backup withholding" include interest, dividends, rents, and payments for work you do as an independent contractor. Under the backup withholding rules, the business or bank must withhold 31% of a payment if:

1. You have not given the payer your taxpayer identification number in the required manner,
2. The IRS has notified the payer that you provided them with an incorrect identification number,
3. The IRS has notified the payer to start withholding because you had not reported all of your interest or dividend income; or
4. You have not certified, when required, that you were not subject to backup withholding for interest and dividends.

Payers who withhold income tax under the backup withholding rules must show the tax withheld on a Form 1099. You should receive this form from the payer by February 1, 1999. If you have not received it by then, contact the bank or business that made payments to you. You should include the amount of tax withheld as a payment on your Form 1040, 1040A or 1040EZ. More detailed information on the backup withholding rules and procedures for payers can be found in Publications 1, Publication 679 and Publication 1281.

For more information, see Publication 505, Tax Withholding and Estimated Tax. Publications can be downloaded from this site, or ordered by calling 1-800-829-3676.

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