26 CFR 31.3406(b)(2)-1 - Reportable interest payment.

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§ 31.3406(b)(2)-1 Reportable interest payment.

(a) Interest subject to backup withholding -

(1) In general. A payment of a kind, and to a payee, that is required to be reported under section 6049 (relating to returns regarding interest and original issue discount) is a reportable payment for purposes of section 3406, subject to the special rules of § 31.3406(b)(2)-2 (relating to original issue discount) and § 31.3406(b)(2)-3 (relating to window transactions). See § 31.6051-4 for the requirement to furnish a statement to the payee if tax is withheld under section 3406.

(2) Special rule for tax-exempt interest. When an issuer is required to make an information return under § 1.6049-4(d)(8) of this chapter because a payee provided a signed written statement on the envelope or shell incorrectly claiming that the interest was exempt from taxation under section 103(a) (as described in § 1.6049-5(b)(1)(ii) of this chapter), the issuer is not required to impose withholding under section 3406.

(b) Amount subject to backup withholding -

(1) In general. The amount of interest subject to withholding under section 3406 is the amount subject to reporting under section 6049.

(2) Special rule to adjust for premature withdrawal penalty. Solely for purposes of computing the amount subject to withholding under section 3406, the payor may elect not to withhold from the portion of any interest payment that is not received by the payee because a penalty is in fact imposed for premature withdrawal of funds deposited in a time savings account, certificate of deposit, or similar class of deposit.

[T.D. 8637, 60 FR 66115, Dec. 21, 1995]

Title 26 published on 2015-04-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 26 CFR Part 31 after this date.

  • 2015-10-23; vol. 80 # 205 - Friday, October 23, 2015
    1. 80 FR 64378 - Definition of Terms Relating to Marital Status
      GPO FDSys XML | Text
      DEPARTMENT OF THE TREASURY, Internal Revenue Service
      Notice of proposed rulemaking.
      Written or electronic comments and requests for a public hearing must be received by December 7, 2015.
      26 CFR Parts 1, 20, 25, 26, 31, and 301