Backup Withholding

The term backup withholding means the withholding required under section 3406.

Backup Withholding is a type of Withholding (flat rate of 28%) on certain types of U.S. Source FDAP Income (e.g. Interest, Dividends, Patronage dividends, Rents, Royalties, Commissions and fees) paid to U.S. individuals or U.S. trusts that have filed to provide their tax identification number (TIN).