On March 1, First National Bank opened three accounts: 1) a savings account for Margaret Nelson, who did not have a TIN but signed a certification that she had applied for one; 2) a money market savings account for Linda Miller, who could not remember her TIN but promised to provide it at the earliest possible date; and 3) a certificate of deposit for John Whiteside, who completed a Form W-9 but provided a TIN with only eight numbers. Ms. Nelson provided her newly acquired TIN to the bank on April 15, Ms. Miller provided her TIN on April 5, and Mr. Whiteside provided his TIN to the bank on March 10. Interest was paid on all of these accounts on March 31, and the bank withheld 28 percent of the interest payments. On April 20 all the payees requested that the withheld interest be refunded. What should the bank do?

Question

Quizplus · Accepted Answer

The bank should refund the withheld interest to Ms. Nelson and Mr. Whiteside because they provided their TINs within the grace period allowed by the IRS, which is generally 60 days from the account opening. Linda Miller did not provide her TIN within this period, so the withholding was not erroneous in her case.

On March 1, First National Bank Opened Three Accounts: 1)