If taxpayers fail to provide their bank with an identification number, they are subject to backup withholding on interest payments.

Question

Quizplus · Accepted Answer

This is true. Taxpayers need to provide their identification number (such as their Social Security Number) to their bank in order to avoid backup withholding on interest payments. Backup withholding is when the bank withholds a portion of the interest earned to ensure taxes are paid by the taxpayer.

If Taxpayers Fail to Provide Their Bank with an Identification