IRS PROVIDES RULES ON BACKUP WITHHOLDING NOTICES.

Rev. Proc. 92-32

TABLE OF CONTENTS

Section 1. Purpose

Section 2. Background

Section 3. Scope

Section 4. Requirements as to Form, Content, and Manner of Delivery of the First B Notice

Section 5. Requirements as to Form, Content, and Manner of Delivery of the Second B Notice

Section 6. Requirements as to Form and Content of SSA or IRS Notification Validating a Name/Taxpayer Identification Number Combination

Section 7. Revenue Procedure 91-58 Superseded

Section 8. Effective Date

SECTION 1. PURPOSE

This revenue procedure provides the rules under section 3406(a)(1)(B) of the Internal Revenue Code of 1986 (Code) and section 31.3406(d)-5 of the Employment Taxes and Collection of Income Tax at Source Regulations. It sets forth rules concerning the form, content, and manner of delivery of the notice that a payor must send after being notified by the Internal Revenue Service (IRS) or a broker that a payee has provided an incorrect name and taxpayer identification number combination (name/TIN combination) with respect to an account. This revenue procedure also provides rules for the form and content of the notification from the Social Security Administration (SSA) or from the IRS which must be received by a payor in order to prevent backup withholding from beginning, or to stop it once it has begun, if the payor has received notice of an incorrect name/TIN combination twice within 3 calendar years with respect to the same account.

SEC. 2. BACKGROUND

01. Under section 3406(a)(1)(B), (d)(2)(B), (e)(2), and (h)(8) of the Code and section 31.3406(d)-5(c), (d), (e), and (f) of the regulations, if the IRS or a broker notifies a payor that a payee's name/TIN combination is incorrect, the payor must:

(1) Identify accounts of the payee that contain the same name/TIN combination;

(2) Send to the payee a copy of the notice sent by the IRS or the broker (or an acceptable substitute notice) to the payor; and

(3) Impose backup withholding on all reportable payments made to the account after the close of the 30th business day after the date that the payor receives that notice and on or before the close of the 30th calendar day after the day the payor receives from the payee the payee's name and TIN and a certification that the TIN provided is correct.

02. Under section 3406(h)(2) of the Code and section 31.3406(d)- 5(g) of the regulations, if a payor receives 2 notices from the IRS or a broker within 3 calendar years that a payee furnished an incorrect name/TIN combination with respect to the same account, the payor must:

(1) Disregard any future certifications furnished by the payee with respect to the account until the payor receives notification from the SSA (or from the IRS) validating a name/TIN combination;

(2) Send a notice to the payee; and

(3) Impose backup withholding on all reportable payments made to the account after the close of the 30th business day after the day on which the payor receives the second notice and on or before the close of the 30th calendar day after the date the payor receives the notification from the SSA (or the IRS) validating a name/TIN combination for the account.

03. Section 31.3406(d)-5(d)(2) and (g)(1) and (2) of the regulations provides that the notice provided by the payor to a payee must:

(1) Except as otherwise provided by the IRS in an administrative pronouncement, be sent within 15 business days after the date the payor received notice from the IRS or broker; and

(2) Comply with such rules as to form, content, and manner of delivery as provided in this revenue procedure.

04. Section 31.3406(d)-5(g)(5) of the regulations provides that the notification from the SSA or the IRS validating a name/TIN combination is effective only if it complies with such rules as to form, content, and manner of delivery as provided in this revenue procedure.

SEC. 3. SCOPE

This revenue procedure prescribes (1) the form, content, and manner of delivery of the notice of an incorrect name/TIN combination that a payor must provide to a payee under section 31.3406(d)-5(d)(1) or (g)(2) of the regulations (hereinafter "B notice"), and (2) the form and content of the SSA or IRS notification validating a name/TIN combination under section 31.3406(d)-5(g)(5) of the regulations.

SEC. 4. REQUIREMENTS AS TO FORM, CONTENT, AND MANNER OF DELIVERY OF THE FIRST B NOTICE

01. IN GENERAL. This section 4 applies if a payor is required under section 31.3406(d)-5(d)(1) of the regulations to notify a payee of an account that the payor has received notice from the IRS or a broker that the name/TIN combination on the account is incorrect.

02. FORM AND CONTENT OF THE FIRST B NOTICE. The payor must send to the payee of the account either a copy of the notice from the IRS or an acceptable substitute notice. A substitute notice is acceptable if the notice --

(1) Is sent by the payor before September 1, 1993, and complies with the requirements for an acceptable substitute notice set forth in section 35a.3406-1(c) of the Temporary Employment Taxes and Collection of Income Tax at Source Regulations as in effect prior or subsequent to amendment by T.D. 8248, T.D. 8309, or T.D. 8365;

(2) Is substantially similar to the notice provided in Appendix I to this revenue procedure; or

(3) (a) Informs the payee that the payor has been notified by the IRS or a broker that the name/TIN combination furnished by the payee for an account is incorrect;

(b) Informs the payee of the name/TIN combination that the IRS has determined to be incorrect and the account number or designation of the account;

(c) Advises the payee that the payee must on the enclosed Form W-9 (or acceptable substitute form) --

(A) Correct the name or TIN (or both) and certify, under penalties of perjury, that the newly provided TIN is correct, or

(B) Certify, under penalties of perjury, that the TIN originally furnished to the payor is correct and provide that number and the corresponding name;

(d) Informs the payee that, if the payee fails to do so, the payor is required under section 3406(a)(1)(B) of the Code to begin backup withholding of 20 percent of the reportable payments made to the account of the payee after a specified date (which may be no later than 30 business days after the date that the payor received notice from the IRS or a broker);

(e) Advises the payee that, if the name/TIN combination originally furnished to the payor is correct, the payee must contact the SSA (or, in the case of an incorrect employer identification number, the Internal Revenue Service Center where the payee is required to file his or her income tax return) to resolve the problem giving rise to the notice of an incorrect name/TIN combination;

(f) Advises the payee that:

(A) If the notice of an incorrect name/TIN combination is due to a change in a business name that has not been communicated to the Internal Revenue Service Center, the payee must contact the Internal Revenue Service Center to reassign the taxpayer identification number to the new name, or

(B) if the notice of an incorrect name/TIN combination is due to a name change by the payee that the payee has not communicated to the SSA, the payee must contact the SSA to reassign the taxpayer identification number to the new name (The information set forth in this paragraph (3)(f)(B) of section 4.02 may be provided at the payor's option.);

(g) Advises the payee of other necessary documentation (i.e., account creation documents) that the payee must provide to the payor in order to change the name or taxpayer identification number (or both) on the account and how to provide such information;

(h) Advises the payee to contact the SSA to obtain a social security card if the payee was never assigned a social security number or to obtain a replacement social security card if the payee lost his or her card and does not remember his or her social security number; and

(i) Advises the payee to complete and return the enclosed Form W-9 (or an acceptable substitute form) and, if necessary, other documents of the payor as described in paragraph (3)(g) of this section 4.02 before the time described in paragraph (3)(d) of this section 4.02 in order to prevent backup withholding under section 3406(a)(1)(B) of the Code from starting or to stop it once it has begun end to avoid possible imposition of a penalty under section 6723 for failure to provide a correct TIN.

03. OMISSION OR REVISION OF INFORMATION OTHERWISE REQUIRED UNDER SECTION 4.02. A payor may omit or revise information otherwise required to be provided under section 4.02 if the payor reasonably believes that such information does not apply to the payee (or provide additional information if the payor reasonably believes that additional information applies to the payee) because of the status of the payee or a practice of the payor permitted under the regulations under section 3406 of the Code. Thus, for example, a payor may give a payee to which paragraph (3)(f)(B) of section 4.02 applies the option of providing both surnames if the payee is unable currently to contact the SSA.

04. MANNER OF DELIVERY OF THE FIRST B NOTICE. A payor must deliver the notice required under this section 4 to a payee as follows:

(1) The payor must mail the notice within 15 business days after the date that the payor receives notice from the IRS or a broker under section 31.3406(d)-5(c)(1) or (2) of the regulations;

(2) The payor must mail the notice in an envelope which states on the outside in a bold and conspicuous manner either the words "Important Tax Document Enclosed" or "Important Tax Return Document." The payor must mail the notice to the payee's last known address by first-class mail. However, if the customary practice of the payor is not to mail any correspondence to a payee, the payor may furnish the notice by personal delivery, by intra-office mail, or by any other means reasonably expected to furnish the contents to the payee promptly. A payor is not required to send the notice to the payee if there is currently a "do not mail" or a "stop mail hold" instruction or an undeliverable address (i.e., other mailings to that address have been returned to the payor because the address was incorrect and no new address has been provided to the payor) for the account subject to backup withholding under section 3406(a)(1)(B) of the Code. In such case, the payor must handle the notice in the same manner that the payor handles other correspondence to the payee; and

(3) The payor must furnish the following materials with the notice:

(a) A Form W-9 or an acceptable substitute form together with instructions for use of that form, and

(b) Any other document necessary to change the name or taxpayer identification number (or both) on the account of a payee.

(4) The payor may include a reply envelope. The payor may not include any other material in the mailing.

SEC. 5 REQUIREMENTS AS TO FORM, CONTENT, AND MANNER OF DELIVERY OF THE SECOND B NOTICE

01. IN GENERAL. This section 5 applies if a payor is required under section 31.3406(d)-5(g) of the regulations to notify a payee of an account that the payor has received notice from the IRS or a broker twice within 3 calender years that the name/TIN combination on the account is incorrect.

02. FORM AND CONTENT OF THE SECOND B NOTICE. A notice is acceptable under this section 5 if the notice:

(1) Is sent by the payor before September 1, 1993, and complies with the requirements of section 35a.3406-1(f)(2) of the Temporary Employment Taxes and Collection of Income Tax at Source Regulations, as amended by T.D. 8365;

(2) Is substantially similar to the notice provided in Appendix II to this revenue procedure; or

(3) (a) Informs the payee that the payor has been notified by the IRS or a broker twice within 3 calendar years that the name/TIN combination furnished by the payee for an account is incorrect;

(b) Informs the payee in the second notice of the name/TIN combination that the IRS has determined to be incorrect and the corresponding account number or designation;

(c) Informs the payee that the payor is required under section 3406(a)(1)(B) of the Code to begin backup withholding of 20 percent of the reportable payments made to the account of the payee after a specified date (which may be no later than 30 business days after the date that the payor received the second notice from the IRS or a broker), if the payor does not receive --

(A) In the case of an incorrect social security number, Form SSA-7028, Notice to Third Party of Social Security Number Assignment, from the SSA validating a name/TIN combination, or

(B) In the case of an incorrect employer identification number, IRS Letter 147C validating a name/TIN combination;

(d) Informs the payee that the payor is required to disregard any future name/TIN combinations received from the payee with respect to the account (whether or not the TIN is certified under penalties of perjury) unless the SSA or the IRS has validated the name/TIN combination;

(e) Advises the payee that, in the case of an incorrect social security number, the payee must take the following steps to prevent backup withholding under section 3406(a)(1)(B) of the Code from starting or to stop it once it has begun:

(A) Contact the payee's local SSA office by telephone and ask what actions are required by the payee for the SSA to issue a validated social security number for backup withholding tax purposes,

(B) Provide a copy of the notice from the payor to the SSA, and

(C) Request and authorize the SSA to send Form SSA-7028 directly to the payor with a copy of the notice from the payor attached;

(f) Advises the payee that, in the case of an incorrect employer identification number, the payee must take the following steps to prevent backup withholding under section 3406(a)(1)(B) of the Code from starting or to stop it once it has begun:

(A) Contact, in writing, the Internal Revenue Service Center (Attn: Entity Section) where the payee files his or her income tax return, and request the IRS to provide a Letter 147C to the payee,

(B) Enclose a copy of the notice from the payor in the communication to the Internal Revenue Service Center, and

(C) Once the payee has received the Letter 147C from the Internal Revenue Service Center, provide to the payor the Letter 147C and a copy of the notice from the payor.

03. OMISSION OR REVISION OF INFORMATION OTHERWISE REQUIRED UNDER SECTION 5.02. A payor may omit or revise information otherwise required to be provided under section 5.02 if the payor reasonably believes that the information does not apply to the payee (or provide additional information if the payor reasonably believes that additional information applies to the payee) because of the status of the payee or a practice of the payor permitted under the regulations under section 3406 of the Code.

04. MANNER OF DELIVERY OF THE SECOND B NOTICE. A payor must deliver a notice required under this section 5 to a payee in the same manner as a notice to a payee described under section 4.04, except that the payor is not required to furnish to the payee a Form W-9, an acceptable substitute form, or the instructions for use of such form.

SEC. 6. REQUIREMENTS AS TO FORM AND CONTENT OF SSA OR IRS NOTIFICATION VALIDATING A NAME/TIN COMBINATION.

01. IN GENERAL. This section 6 applies if a payor has received notice from the IRS or a broker twice within 3 calendar years that the name/TIN combination on the account is incorrect.

02. FORM AND CONTENT OF THE NOTIFICATION UNDER THIS SECTION. This section sets forth the requirements as to the form and content of the notification from the SSA or the IRS validating a name/TIN combination that under section 31.3406(d)-5(g)(5) of the regulations must be received by the payor in order to prevent backup withholding from starting, or to stop it once it has begun.

(1) INCORRECT SOCIAL SECURITY NUMBER. In the case of an incorrect social security number (SSN), a notification validating a name/TIN combination is effective for purposes of section 31.3406(d)- 5(g)(5) of the regulations if it is made on Form SSA-7028.

(2) INCORRECT EMPLOYER IDENTIFICATION NUMBER. In the case of an incorrect employer identification number (EIN), a notification validating a name/TIN combination is effective for purposes of section 31.3406(d)-5(g)(5) of the regulations if it is made on Letter 147C.

(3) TRANSITIONAL RULE. In the case of either an incorrect SSN or an incorrect EIN, a notification validating a name/TIN combination that is received before September 1, 1992, is effective for purposes of section 31.3406(d)-5(g)(5) of the regulations if it is made on Form SSA-7028, Letter 147C, or any other document from the SSN or the IRS.

SEC. 7. REVENUE PROCEDURE 91-58 SUPERSEDED

Revenue Procedure 91-58, 1991-40 I.R.B. 119, is superseded by this revenue procedure.

SEC. 8. EFFECTIVE DATE

This revenue procedure generally applies for notices received on or after September 1, 1990.

DRAFTING INFORMATION

The principal author of this revenue procedure is Renay France of the Office of the Assistant Chief Counsel (Income Tax and Accounting), within the Office of the Chief Counsel.

FOR FURTHER INFORMATION

For additional information regarding this revenue procedure contact Renay France on (202) 377-7978, not a toll-free call).

APPENDIX 1 -- First B notice

IMPORTANT TAX NOTICE*************************ACTION IS REQUIRED

We need a Form W-9 from you within 30 days.

BACKUP WITHHOLDING WARNING!

Account Number ______________________

Current Name on Account _____________

Current TIN on Account ______________

The Internal Revenue Service (IRS) has notified us that the taxpayer identification number (TIN) on your account with us does not match their records. The IRS considers a TIN as incorrect if either the name or number shown on an account does not match a name and number combination in their files or the files of the Social Security Administration (SSA). If you do not take appropriate action to help us correct this problem by [Insert the date after which you will begin backup withholding (which may be no later than 30 business days after the date that you received the B notice from the IRS (or a broker))], the law requires us to withhold 20 percent of the interest, dividends, and certain other payments that we make to your account. This is called backup withholding.

In addition to backup withholding, you may be subject to a $50 penalty by the IRS for failing to give us your correct name/TIN combination.

This notice tells you how to help us make your account records accurate and how to avoid backup withholding and the penalty.

WHY YOUR TIN MAY BE CONSIDERED AS INCORRECT.

An individual's TIN is his or her social security number (SSN). Often a TIN does not match IRS records because a name has changed through marriage, divorce, adoption, etc., and the change has not been reported to SSA, so it has not been recorded in SSA's files.

Sometimes an account or transaction may not contain the correct SSN of the actual owner. For example, an account in a child's name may reflect a parent's SSN. (An account should be in the name and SSN of the actual owner.)

WHAT YOU NEED TO DO.

INDIVIDUALS

If you have never been assigned a social security number (or if you lost your social security card and do not know your SSN):

1. Call your local SSA office and find out how to obtain an original (or a replacement) social security card. Then apply for it.

2. Read the enclosed Form W-9; write the words "applied for" on the form; sign it, and return it to us. This is called an awaiting TIN certificate and applies only to those persons who have never been issued as SSN.

3. When you receive your social security card, send us ANOTHER Form W-9 with your SSN and name as shown on the card. An awaiting TIN certification will only stop or prevent backup withholding before September 1, 1993.

If you already have a social security number: Compare the name and SSN on your account with us (shown on page ___) with the name and SSN shown on your social security card. Then use the chart below to decide what action to take.

IF -- THEN --

INSTRUCTIONS FOR NONINDIVIDUALS AND CERTAIN SOLE PROPRIETORS

For most nonindividuals (such as trusts, estates, partnerships, and similar entities), the TIN is the employer identification number (EIN). The EIN on your account may be incorrect because it does not contain the number of the ACTUAL owner of the account. For example, an account of an investment club or bowling league should reflect the organization's own EIN and name, rather than the SSN of a member. Please put the name and EIN on the enclosed Form W-9, sign it, and send it to us.

A sole proprietor must furnish his or her individual name and either his or her SSN or the EIN for his or her sole proprietorship. In addition to his or her individual name, the sole proprietor may also furnish the business name for the sole proprietorship, provided his or her individual name is listed before the business name. A sole proprietor must not furnish only the business name. Please put the individual name and SSN or EIN on the enclosed Form W-9, sign it, and send it to us.

IMPORTANT REMINDER!

YOU MUST SEND US A SIGNED IRS FORM W-9 BY [Insert the date after which you will begin backup withholding (which may be no later than 30 business days after the date that you received the B notice from the IRS (or a broker))] even if the name and number (SSN or EIN) on your account with us match the name and number (SSN or EIN) on your social security card or the document issuing you an EIN. If we do not receive your Form W-9, and any other documents that we need to change the name or TIN (or both) on your account, we are required by law to withhold 20 percent from any reportable payment that we pay to your account after [Insert the same date as the one inserted at the beginning of this paragraph.] until we receive the necessary documents.

A Form W-9 is enclosed for your convenience, as well as any additional documents allowing us to change the name/TIN combination on your account.

APPENDIX II -- Second B Notice

IMPORTANT TAX NOTICE ********************* ACTION IS REQUIRED

YOU MUST HAVE THE IRS OR SSA VALIDATE YOUR TAXPAYER IDENTIFICATION NUMBER AND RETURN IT TO US WITHIN 30 DAYS

SECOND BACKUP WITHHOLDING WARNING!

Account Number ______________________

Current Name on Account _____________

Current TIN on Account ______________

We have received notice from the Internal Revenue Service (IRS) twice within 3 years stating that the combination of the name and taxpayer identification number (name/TIN combination) on your account with us is incorrect. (Your account number, current name on the account, and current taxpayer identification number ("TIN") on the account are shown above.) A name/TIN combination is incorrect if it does not match a name/TIN combination shown on the records of the Social Security Administration (SSA) or the IRS.

You should follow the instructions below to correct this problem and send the corrected information to us by [Insert the date after which you will begin backup withholding (which may be no later than 30 business days after the date that you received the second B notice from the Service (or a broker)]. If we do not have the correct information by that date, the law requires us to withhold 20 percent of the interest, dividends, and certain other payments that we make to your account after that date.

Section 3406 of the Internal Revenue Code requires that we withhold 20 percent in tax, called backup withholding, when you do not give us your correct name/TIN combination. Because of the notices we received from the IRS, we are now required to disregard any future name/TIN combinations you furnish us for your account (whether or not you certify your TIN under penalties of perjury) unless the SSA (or, in the case of an incorrect employer identification number, the IRS) validates your name/TIN combination. Also, the IRS may charge you a $50 penalty for failing to provide us with your correct name/TIN combination.

WHAT YOU NEED TO DO

Follow the instructions below to correct your account record to avoid backup withholding on your account (or to stop it once it has begun) and to avoid the penalty.

INDIVIDUALS

INSTRUCTIONS FOR INCORRECT SOCIAL SECURITY NUMBERS

If the incorrect TIN you furnished us is a social security number, you must:

1. Contact your local SSA office by telephone and ask what you need to do to obtain a validated social security number for backup withholding tax purposes;

2. Give a copy of this notice to the SSA; and

3. Request and authorize the SSA to send Form SSA-7028, Notice to Third Party of Social Security Number Assignment, directly to us with a copy of this notice attached.

NONINDIVIDUALS OR CERTAIN SOLE PROPRIETORS

INSTRUCTIONS FOR INCORRECT EMPLOYER IDENTIFICATION NUMBERS

If the incorrect TIN you furnished us is an employer identification number, you must:

1. Write the Internal Revenue Service Center (Attn: Entity Section) where you file your income tax return, and ask the IRS to SEND YOU a Letter 147C;

2. Enclose a copy of this notice in your letter to the Internal Revenue Service Center; and

3. When the IRS sends you the Letter 147C, send it to us with a copy of this notice attached.