Treasury Regulations · 26 CFR
§ 31.3406(e)-1. Period during which backup withholding is required.
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(e)
Cite as 26 CFR § 31.3406(e)-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
- Issued under
- 26 U.S.C. § 3406(e)
- Length
- 619 words · about 3 min to read
- Cross-references
- cites 1 Code section and 6 regulations; cited by 5
¶(a) In general. A payor must withhold under section 3406 at a rate of 31 percent on any reportable payment (as defined in section 3406(b)) made to a payee during the period described in this section (irrespective of the number of conditions for imposing withholding under section 3406 that exist with respect to the payee). A payor must continue to withhold under section 3406 until no condition for imposing backup withholding exists with respect to the payee.
¶(b) Failure to furnish a taxpayer identification number in the manner required—
¶(1) Start withholding. A payor is required to withhold under section 3406(a)(1)(A) at a rate of 31 percent on any reportable payment (as defined in section 3406(b)) at the time the payor pays the reportable payment (as described in § 31.3406(a)-4) to a payee if—
¶(i) The payor has not received the payee's taxpayer identification number in the manner required in § 31.3406(d)-1; or
¶(ii) The payor has received notice from a broker (as required in § 31.3406(d)-4(a)(1)(iii)) with respect to a readily tradable instrument that the payee did not furnish a taxpayer identification number to the broker in the manner required in § 31.3406(d)-1 and the payor has not received the taxpayer identification number from the payee in this manner.
¶(2) Stop withholding. The payor must stop withholding under section 3406(a)(1)(A) within 30 days after the payor receives—
¶(ii) A statement, in such form and containing such information as is required under applicable regulations, that the payee is not a United States person.
¶(c) Notification of an incorrect taxpayer identification number. See § 31.3406(d)-5(e) and (g)(3) for the period for which withholding is required in the case of notification of an incorrect taxpayer identification number.
¶(d) Notified payee underreporting. See § 31.3406(c)-1(e) for the period for which withholding is required in the case of notified payee underreporting.
¶(e) Payee certification failure—
¶(1) Start withholding. A payor is required to withhold under section 3406(a)(1)(D) at a rate of 31 percent on any reportable interest or dividend payment (as defined in section 3406(b)(2)) at the time the payor pays such reportable interest or dividend payment (as described in § 31.3406(a)-4) to a payee if—
¶(ii) The payor has received notice from a broker (as required in § 31.3406(d)-4(a)(1)(iii)) with respect to a readily tradable instrument that the payee did not make the required certification and the payor has not received the required certification from the payee.
¶(2) Stop withholding. The payor must stop withholding under section 3406(a)(1)(D) on any reportable interest or dividend payment within 30 days after the payor receives the certification from the payee in the manner required by § 31.3406(d)-2.
¶(f) Rule for determining when the payor receives a taxpayer identification number or certificate from a payee. In determining whether a payee has failed to provide a taxpayer identification number or any certification to a payor (including a Form W-8 or substitute form), a payor is required to process the taxpayer identification number or certification within 30 days after the payor receives the taxpayer identification number or certification from the payee or in certain cases, from a broker. Thus, the payor may take up to 30 days to treat the taxpayer identification number or a certificate as having been received.
[T.D. 8637, 60 FR 66127, Dec. 21, 1995]
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
Regulations it cites
- § 31.3406(a)-4 Time when payments are considered to be paid and subject to backup withholding.
- § 31.3406(d)-1 Manner required for furnishing a taxpayer identification number.
- § 31.3406(d)-4 Special rules for readily tradable instruments acquired through a broker.
- § 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.
Cited by 5 other regulations
- § 31.3406-0 Outline of the backup withholding regulations.
- § 31.3406(d)-1 Manner required for furnishing a taxpayer identification number.
- § 31.3406(d)-2 Payee certification failure.
- § 31.3406(g)-3 Exemption while payee is waiting for a taxpayer identification number.
- § 31.6413(a)-3 Repayment by payor of tax erroneously collected from payee.
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 66127)
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(d)-2 Payee certification failure.
- § 31.3406(d)-3 Special 30-day rules for certain reportable payments.
- § 31.3406(d)-4 Special rules for readily tradable instruments acquired through a broker.
- § 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(e)-1 Period during which backup withholding is required.
- § 31.3406(f)-1 Confidentiality of information.
- § 31.3406(g)-1 Exception for payments to certain payees and certain other payments.
- § 31.3406(g)-2 Exception for reportable payment for which withholding is otherwise required.
- § 31.3406(g)-3 Exemption while payee is waiting for a taxpayer identification number.