Treasury Regulations · 26 CFR
§ 31.3406(b)(2)-5. Reportable patronage dividend payment.
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(b)(2)
Cite as 26 CFR § 31.3406(b)(2)-5
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
- Issued under
- 26 U.S.C. § 3406(b)(2)
- Length
- 305 words · about 1 min to read
- Cross-references
- cites 3 Code sections and 3 regulations; cited by 1
¶(a) Patronage dividends subject to backup withholding. A payment of a kind, and to a payee, that is required to be reported under section 6044 (relating to returns regarding patronage dividends) is a reportable payment for purposes of section 3406. See § 31.6051-4 for the requirement to furnish a statement to the payee if tax is withheld under section 3406.
¶(b) Amount subject to backup withholding—
¶(1) Failure to provide taxpayer identification number or notification of incorrect taxpayer identification number. For purposes of sections 3406(a)(1) (A) and (B), the amount of a payment described in paragraph (a) of this section that is subject to withholding under section 3406 is the amount subject to reporting under section 6044, but only to the extent the payment is made in money. For purposes of this paragraph (b), money includes cash or a qualified check (as defined in section 1388(c)(4)).
¶(2) Notified payee underreporting or payee certification failure. For purposes of sections 3406(a)(1) (C) and (D), the amount of a payment described in paragraph (a) of this section that is subject to withholding under section 3406 is the amount subject to withholding under paragraph (b)(1) of this section, but only if 50 percent or more of that reportable amount is paid in money. Thus, a payor is required to withhold according to this paragraph (b)(2) on a payment if—
¶(i) There has been a notified payee underreporting described in section 3406(a)(1)(C) and § 31.3406(c)-1 or there has been a payee certification failure described in section 3406(a)(1)(D) and § 31.3406(d)-2;
¶(iii) Fifty percent or more of the payment is in cash or by qualified check.
[T.D. 8637, 60 FR 66117, Dec. 21, 1995]
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
- § 6044 Returns regarding payments of patronage dividends
- § 3406 Backup withholding
- § 1388 Definitions; special rules
Regulations it cites
- § 31.6051-4 Statement required in case of backup withholding.
- § 31.3406(c)-1 Notified payee underreporting of reportable interest or dividend payments.
- § 31.3406(d)-2 Payee certification failure.
Cited by 1 other regulation
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.
- Issued by T.D. 8637 (60 FR 66117)
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
- § 31.3406(b)(2)-1 Reportable interest payment.
- § 31.3406(b)(2)-2 Original issue discount.
- § 31.3406(b)(2)-3 Window transactions.
- § 31.3406(b)(2)-4 Reportable dividend payment.
- § 31.3406(b)(2)-5 Reportable patronage dividend payment.
- § 31.3406(b)(3)-1 Reportable payments of rents, commissions, nonemployee compensation, etc.
- § 31.3406(b)(3)-2 Reportable barter exchanges and gross proceeds of sales of securities, commodities, or digital assets by brokers.
- § 31.3406(b)(3)-3 Reportable payments by certain fishing boat operators.
- § 31.3406(b)(3)-4 Reportable payments of royalties.