Rev. Proc. 83-89

SECTION 1. PURPOSE

The purpose of this revenue procedure is to set forth guidelines for payors of interest, dividends, and patronage dividends and brokers that want to provide a substitute for Form W-9, Payer's Request for Taxpayer Identification Number. Payers or brokers following these guidelines may design their own form to use in place of Form W-9 without obtaining approval from the Internal Revenue Service.

SEC. 2. BACKGROUND

.01 Under section 3406 of the Internal Revenue Code, which was added by section 104 of the Interest and Dividend Tax Compliance Act of 1983, (the Act) Pub. L. 98-67, 97 Stat. 369, a payee is subject to backup withholding of 20 percent on reportable payments of interest, dividends, or patronage dividends if:

1 The payee fails to furnish a taxpayer identification number (TIN) in the manner required,

2 The Secretary notifies the payor that the TIN furnished by the payee is incorrect,

3 The Secretary notifies the payor of notified payee underreporting, or

4 When required to do so, the payee fails to certify, under penalties of perjury, that the payee is not subject to backup withholding due to notified payee underreporting.

.02 Under section 6676(b) of the Code, amended by section 105 of the Act, payors of reportable interest or dividend payments are subject to a penalty for failure to provide the payee's correct TIN on certain information returns unless the payor exercises due diligence in attempting to obtain the payees correct TIN, and in furnishing the number on the information return.

.03 Under section 35a.9999-1 A-5 and A-6 of the Temporary Employment Tax Regulations, the payor will be considered to have exercised due diligence with respect to a payee of a pre-1984 account if the payor sends a separate mailing to a payee who has not previously certified under penalties of perjury that the payees TIN is correct. The separate mailing must contain a notice, a postage prepaid reply envelope, and a form on which the payee may certify under penalties of perjury, that the correct TIN is being furnished to the payor.

.04 Under 35a.9999-1 A-32 of the temporary regulations, to avoid imposing backup withholding on accounts opened on or after January 1, 1984, the payor or broker must obtain certification from the payee that the TIN provided is correct and that the payee is not subject to backup withholding due to notified payee underreporting.

.05 The Service provides Form W9, for the payee to certify that the TIN provided is correct and that backup withholding is not required due to notified payee underreporting. The payor or broker may use Form W-9, or a substitute form or forms, provided the requirements set forth in sections 3 and 4 are met.

SEC. 3. REQUIREMENTS FOR ACCOUNTS OPENED PRIOR TO 1/1/84

.01 Substitute forms must provide space for the name, address and TIN of the payee in any format the payor or broker chooses.

.02 If the payor requests the payee to certify the correctness of the TIN, space for the signature of the payee and the date should be provided under substantially similar language to the following statement:

Under penalties of perjury, I certify that the number shown on this form is my correct taxpayer identification number.

.03 The substance of the instructions contained on the official Form W-9, with information sufficient to enable the payee to determine if correct number is being given to the payor or broker, must be provided with the substitute form, as part of the form, or on a separate paper provided with the form.

SEC. 4. ADDITIONAL CERTIFICATION REQUIREMENTS FOR ACCOUNTS OPENED ON OR AFTER 1/1/84

.01 In addition to certifying the correct TIN, a payee is also required to certify that the payee is not subject to backup withholding due to notified payee underreporting, for accounts opened on or after January 1, 1984. Payors or brokers may use either separate or combined substitute forms for this purpose.

.02 If a separate substitute form is used to certify that the payee is not subject to backup withholding due to notified underreporting, the form must contain substantially similar language to the following statement above the signature and date:

Under penalties of perjury, I certify that I am not subject to backup withholding because (1) I have not been notified that I am subject to backup withholding as a result of failure to report all interest or dividends, or (2) the Internal Revenue Service has notified me that I am no longer subject to backup withholding.

.03 If a combined form is used to certify the TIN as well as to certify that the payee is not subject to backup withholding, due to notified payee underreporting, substantially similar language to the following statement must be used above the signature and date:

Under penalties of perjury, I certify (1) that the number shown on this form is my correct taxpayer identification number, and (2) that I am not subject to backup withholding because (a) I have not been notified that I am subject to backup withholding as a result of a taiiure to report all interest or dividends, or (b) the Internal Revenue Service has notified me that I am no longer subject to backup withholding.

4 If a payor uses one form for both certifications that does not follow the Form W-9 format, the form must contain instructions that the payee must strike out the language certifying that the payee is not subject to backup withholding due to notified payee underreporting if the Service notified the payee that the payee is subject to backup withholding, and the payee has not received notice from the Service advising that backup withholding has terminated.

SEC. 5. MISCELLANEOUS PROVISIONS

.01 A payor or broker may incorporate the certifications in sections 3 and 4 into other forms customarily used, such as account signature cards, provided that the required certifications are clearly indicated.

.02 A payor or broker that wants to obtain TINs that are not certified under penalties of perjury as to their correctness may design the form as it chooses. The payee need not certify the correctness of the TIN nor whether the payee is subject to backup withholding due to notified payee underreporting for payments other than interest, dividends, patronage dividends, or broker and barter exchange transactions subject to reporting under section 6045 of the Code.

.03 If a payor or broker requires the payee to use a substitute form provided by the payor or broker, the payor or broker may refuse to accept certifications (including certifications provided on Form W-9) that are not on the substitute form. However, if the payor or broker refuses to accept the form provided by the payee, the payor or broker must comply with the pertinent portions of section 31.3452(f)-1(b)(2) of the Employment Tax Regulations relating to the procedures that a payor must follow upon receipt of an unacceptable form.

.04 An exempt recipient may want to file an exemption certificate to avoid possible erroneous back up withholding. Either Form W-9 or a substitute form may be used for this purpose. The substitute form must conform generally to the Form W-9 and the instructions related to exempt recipients. The exempt recipient must be required to provide its TIN on the form. A payor or broker may require that any certification that a payee is an exempt recipient be made only on the substitute form provided by the payor or broker.

.05 This revenue procedure also applies to brokers who are payors of reportable interest or dividends. For additional rules pertinent to brokers see section 35a.9999-1 A-41 of the temporary regulations.

.06 Form W-8, Certificate of Foreign Status, is a form on which a payee may certify under penalties of perjury that because of the payees foreign status, payments to the payee are exempt from information reporting and thus backup withholding. For payment of interest or dividends to an individual, the payee would certify that the payee is neither a citizen nor a resident of the United States. Under section 35a.9999-2 A-22 of the temporary regulations, if a payor or broker use, a substitute Form W-9, the payor or broker may incorporate the Form W-8 certification on the substitute Form W-9 by using the following statement:

Under penalties of perjury, I certify that I am not a United States citizen or resident.

.07 A payee who is waiting for receipt of a taxpayer identification number will be exempt from backup withholding for a period of 60 days after the payee certifies to the payor as required in A-18 of section 35a.9999-2 of the temporary regulations. A payor (including a broker that holds a readily tradeable instrument in street name) may use a substitute W-9 for this certification. If the substitute Form W-9 is substantially similar to the Form W-9 as currently issued, the payor should instruct the payee to write "Applied for" in the space available for the payees taxpayer identification number and advise the payee, in supplemental instructions or orally, that if a taxpayer identification number is not received by the payor within 60 days, tne payor is required to withhold 20 percent of all reportable payments thereafter made to the payee until the payor receives a number from the payee. The payee must sign the form under penalties of perjury in order to have made a valid certification. If the substitute form does not contain certification requirements, substantially similar language to the following will satisfy this requirement:

I certify, under penalties of perjury, that a taxpayer identification number has not been issued to me.. and that I mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office (or I intend to mail or delivery an application in the near future). I understand that if I do not provide a taxpayer identification number to the payor within 60 days, the payor is required to withhold 20 percent of all reportable payments thereafter made to me until I provide a number.

SEC. 6. EFFECTIVE DATE

This revenue procedure is effective on December 19, 1983, the date of publication.