Topic 307 - Backup Withholding.  Banks and other businesses that pay you certain kinds of income must file Form 1099, an information return, with the IRS. Generally, these payments are not subject to withholding however they may be subject to backup withholding. Payments that may be subject to ""backup withholding"" include interest, dividends, rents, royalties, payments for work you do as an independent contractor, and broker payments. Under the backup withholding rules, the business or bank must withhold on a payment if: You have not given the payer your taxpayer identification number in the required manner, The IRS has notified the payer that the taxpayer identification number you provided is incorrect. The IRS has notified the payer to start withholding on interest and dividends because you had not reported all of your interest or dividend income in prior years or You have not certified that you were not subject to backup withholding on interest and dividends. Please contact a tax professional for further information. Click here for IRS information.