Treasury Regulations · 26 CFR
§ 31.3406(a)-1. Backup withholding requirement on reportable payments.
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 3406(a)
Cite as 26 CFR § 31.3406(a)-1
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Issued
- December 21, 1995 by T.D. 8637
- Last amended
- August 10, 2026 by T.D. 10053
- Issued under
- 26 U.S.C. § 3406(a)
- Length
- 422 words · about 2 min to read
- Cross-references
- cites 2 Code sections and 8 regulations; cited by 3
¶(a) Overview. Under section 3406 of the Internal Revenue Code (Code), a payor must deduct and withhold an amount equal to the product of the fourth lowest rate of tax applicable under section 1(c) of the Code and a reportable payment if a condition for withholding exists. Reportable payments mean interest and dividend payments (as defined in section 3406(b)(2)) and other reportable payments (as defined in section 3406(b)(3)). The conditions described in paragraph (b)(1) of this section apply to all reportable payments, including reportable interest and dividend payments. The conditions described in paragraph (b)(2) of this section apply only to reportable interest and dividend payments.
¶(b) Conditions that invoke the backup withholding requirement—
¶(1) Conditions applicable to all reportable payments. A payor of a reportable payment must deduct and withhold under section 3406 if—
¶(i) The payee of the reportable payment does not furnish the payee's taxpayer identification number to the payor, as required in section 3406(a)(1)(A) and § 31.3406(d)-1; or
¶(ii) The Internal Revenue Service or a broker notifies the payor that the taxpayer identification number furnished by its payee for a reportable payment is incorrect, as described in section 3406(a)(1)(B) and § 31.3406(d)-5.
¶(2) Conditions applicable only to reportable interest or dividend payments. A payor of a reportable interest or dividend payment must deduct and withhold under section 3406 if—
¶(i) The Internal Revenue Service or a broker notifies the payor that its payee has underreported interest or dividend income, as described in section 3406(a)(1)(C) and § 31.3406(c)-1; or
¶(ii) The payee fails to certify to the payor or broker that the payee is not subject to withholding due to notified payee underreporting, as described in section 3406(a)(1)(D) and § 31.3406(d)-2.
¶(c) Exceptions. The requirement to withhold does not apply to certain de minimis payments as described in §§ 31.3406(b)(3)-1(b)(3), 31.3406(b)(3)-5(b)(2), and 31.3406(b)(4)-1 or to payments exempt from withholding under §§ 31.3406(g)-1 through 31.3406(g)-3.
¶(d) Cross references. For the definition of payor, see § 31.3406(a)-2. For the definition of taxpayer identification number, see § 31.3406(h)-1(b).
¶(e) Applicability date. The provisions of this section apply with respect to payments made in calendar years beginning after December 31, 2024.
[T.D. 8637, 60 FR 66114, Dec. 21, 1995, as amended by T.D. 10053, 91 FR 51394, Aug. 10, 2026]
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
Regulations it cites
- § 31.3406(d)-1 Manner required for furnishing a taxpayer identification number.
- § 31.3406(d)-5 Backup withholding when the Service or a broker notifies the payor to withhold because the payee's taxpayer identification number is incorrect.
- § 31.3406(c)-1 Notified payee underreporting of reportable interest or dividend payments.
- § 31.3406(d)-2 Payee certification failure.
- § 31.3406(b)(3)-1 Reportable payments of rents, commissions, nonemployee compensation, etc.
- § 31.3406(g)-1 Exception for payments to certain payees and certain other payments.
- § 31.3406(a)-2 Definition of payors obligated to backup withhold.
- § 31.3406(h)-1 Definitions.
Cited by 3 other regulations
Amendment history
From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.
- Amended by T.D. 10053 (91 FR 51394)
- Issued by T.D. 8637 (60 FR 66114)
Where it sits in 26 CFR
- Subchapter C Employment taxes and collection of income tax at source
- Part 31 Employment taxes and collection of income tax at source
- Subpart E Collection of Income Tax at Source
Nearby sections
- § 31.3405(a)-1 Questions and answers relating to Federal income tax withholding on periodic retirement and annuity payments.
- § 31.3405(c)-1 Withholding on eligible rollover distributions; questions and answers.
- § 31.3405(e)-1 Questions and answers relating to withholding on pensions, annuities, and certain other deferred income.
- § 31.3406-0 Outline of the backup withholding regulations.
- § 31.3406(a)-1 Backup withholding requirement on reportable payments.
- § 31.3406(a)-2 Definition of payors obligated to backup withhold.
- § 31.3406(a)-3 Scope and extent of accounts subject to backup withholding.
- § 31.3406(a)-4 Time when payments are considered to be paid and subject to backup withholding.
- § 31.3406(b)(2)-1 Reportable interest payment.