Bureau of Accountancy

BACKUP WITHHOLDING PROCEDURES FOR NYC

The Internal Revenue Service requires that payers (such as the City of New York) to withhold 28% in tax, called Backup Withholding, when payees do not submit their correct Name/TIN combination. The IRS notifies the City of Name/TIN annually of mismatches, which will prompt the generation of B-Notices from the Comptroller’s Office to payees.

1. What is a B-Notice?

• 1st B-Notice and Required Documentation : 1st B-Notices are sent to payees who appear on the IRS Backup Withholding Notification for the 1st time. A Backup Withholding Substitute Form W-9 is attached to the 1st B-Notice. Completion of this form is required from these payees along with a copy of their social security card (if applicable).
• 2nd B-Notice and Required Documentation: 2nd B-Notices are sent to payees who appear on the IRS Backup Withholding Notification for the 2nd or 3rd time in a consecutive year. IRS Letter 147C or Social Security Administration Certification is required from these payees along with a 2nd B-Notice Attachment.

2. What happens if I don’t submit the required documentation listed on the B-Notice?

If the required documentation is not returned within 30 business days, then 28% withholding will begin on the 31st day for 1099 reportable payments. 1099 reportable payments are deemed eligible for Backup Withholding according to IRS regulations.

If the required documentation is returned within 30 business days, then the City’s payee database will be updated to reflect corrected information and the 28% Backup Withholding will be removed from the payee’s record.

Contact Us: Backup Withholding Hot Line

• If you are a B-Notice recipient, or a City Agency with a Backup Withholding related question or problem, you have the option of leaving a message on our Backup Withholding hot line. A Comptroller’s staff member will attempt to respond to your inquiry within 1 business day.
• Hot Line Number: (212) 669-8233