New BNA Back-up Withholding Portfolio Outlines Requirements and Significance of Year End Reporting to IRS

ARLINGTON, Va., July 25, 2011 /PRNewswire-USNewswire/ -- A new BNA Tax & Accounting Portfolio, Information Reporting to U.S. Persons — Payments Subject to Back-up Withholding, written by Carol A. Kassem, discusses the requirements relative to backup withholding as required under section 3406 and the types of payments that may be subject to the imposition of this tax. The Portfolio also describes the timing as to when withholding is required, the process to remit the tax to the IRS, and the reporting required at year end.

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Section I of the Portfolio gives a brief overview of the 1982 Tax Equity and Fiscal Responsibility Act (1982 TEFRA), of which backup withholding is a key provision. Section II goes into details of the tax, such as which payments are subject to backup withholding, when to withhold, and which payees are exempt. The process to facilitate backup withholding is also discussed.

Section III further discusses reportable payments, which include interest income, Original Issue Discount (OID), dividends, brokerage transactions, and other miscellaneous payments, in addition to discussing the use of Forms 1099. Section IV addresses special tax reporting issues such as REMICs, REEITs, and WHFITs.

Details of year-end reporting, as discussed in Section V, include who is required to report, types of recipients, and payor and recipient statements to the IRS. Finally, Section VI focuses on penalties that may be applied due to failure to prepare information correctly and report to recipients and the IRS. Reasonable cause for penalty relief is also discussed.

Also noted throughout the portfolio are requirements for electronic reporting, and instances where electronic reporting is mandatory.

About the Author:

Carol A. Kassem, B.S. Accounting, Louisiana State University (1978); Consultant; Conference Speaker (Information Reporting); Information Reporting Manager, Bank One Corporation (1999–2004); Vice President (Information Reporting Group), JP Morgan Chase Bank, NA (2004–2005); IRS Information Reporting Advisory Committee (IRPAC), American Bankers Association (2002–2005); former member, New York Clearing House Tax Withholding and Information Reporting Committee.

About BNA Tax & Accounting

BNA Tax & Accounting is the foremost source of news, analysis, and practice tools for tax attorneys, estate planners, accountants, and corporate tax and financial accounting professionals. For more than 50 years, BNA Tax & Accounting has offered practitioners expert insights and guidance on every significant issue in tax planning and financial accounting. Written by practitioners for practitioners, BNA's award-winning Portfolios offer topic-driven, in-depth guidance on transactions designed to help tax professionals achieve new levels of excellence and client service. For more information on BNA's U.S. Income Portfolios Library of which this Portfolio is a part, go to http://www.bna.com/US-Income-Portfolios-p7874/?open&cmpid=tmtxpr2011 or call 800.372.1033.

SOURCE BNA Tax & Accounting