SSN Policy Manual

Dealing With Federal Agencies

withholding has the same effect as paying you only 3.45% interest on your account rather than 5%. Some people find the privacy gained fiom the lower interest account worth the cost. Regardless of how the banker words the threat to withhold 31% . . . they can only withhold from the interest that they pay you; they cannot touch the principle. Threatening to withholding 31 % of reportable income is taken much more seriously when it is 31 % of your labor compensation (paycheck). However, as with most tax law, t h s too is not as clear as it first appears; there are several things to consider. First is the issue of "reportable payment." Secondly we need to understand the legal meaning of the word "fail." The meaning of "reportable payment" is given to us in subsection (b), but we must look to Black's Law Dictionary for the meaning of "fail." Reportable Payment Specifically, for our understanding of "reportable payment" we need to look at subsection "(3) Other reportable payment." That subsection lists the following references that the law uses to define what this means. Those references are included here with their meaning and your reporting duty:

Informationat source (a) Payments of $600 or more . .. .. . (c) Recipient to furnish name and address

26 USC 36041

When necessary to make effective the provision of this section, the name and address of the recipient of income shall be furnished upon demand of the person paying the income. 26 USC §6041A(a) Returns regarding payments of remuneration for services and direct sales (f) Recipient to furnish name, address, and identification number; inclusion on return

(1) Any person with respect to whom a return or statement is required under this section to be made by another person shall furnish to such other person his name, address, and identification number at such time and in such manner as the Secretary may prescribe by regulations.

Returns of brokers (a) General rule Every person doing business as a broker shall ... .. . (b) Statements to be furnished to customers

26 USC 96045

Every person required to make a return under subsection (a) shall furnish to each customer whose name is required to be set forth in such return a written statement showing - (1) the name, address, and phone number of the information contact of the person required to make such return, and (2) the information required to be shown on such return with respect to such customer.