Two short letters: withholding has begun (and why, with the amounts), and withholding has ended. Cuts the calls and documents the dates. Read it below, copy the text, print it, or download the .docx for your letterhead.
Template from tincompliance.com. Two short letters: one telling a payee that 24% backup withholding has started and why, one confirming it has stopped. Neither is required by the IRS, but both cut the calls and disputes that withholding produces and both document the dates. Send the start notice with (or just after) the first withheld payment.
[Company name]
[Address]
[Date]
[Payee name]
[Payee address]
Re: Federal backup withholding on payments from [Company]
Dear [payee name],
Starting with the payment dated [date], [Company] is withholding 24% of each reportable payment to you and remitting it to the IRS as federal backup withholding. We are required to do this because [choose one: we have not received a completed Form W-9 from you, requested on [date(s)] / the IRS notified us that the name and taxpayer identification number on your account do not match its records and we did not receive a response to our notice dated [date] within 30 business days / the IRS instructed us to withhold].
Account | [Account / vendor number] |
Payment | $[gross amount] |
Withheld (24%) | $[amount] |
Paid to you | $[net amount] |
This is not an additional tax. The amount withheld is reported to you and to the IRS on Form [1099-NEC / 1099-MISC], box 4, after the end of the year, and it is credited against your income tax when you file your return. We cannot refund amounts already withheld.
To stop withholding on future payments, [send us a signed Form W-9 with the correct name and TIN / send the validation described in our earlier notice: a copy of your Social Security card, or IRS Letter 147C for an EIN] to [return address / secure upload link]. Withholding stops with the first payment after we receive it.
Questions: [name / department], [phone], [email].
[Signature block]
[Company name]
[Address]
[Date]
[Payee name]
[Payee address]
Re: Backup withholding on your account has ended
Dear [payee name],
Thank you for sending your [Form W-9 / validation] on [date]. We have updated your account [account / vendor number] with the name and taxpayer identification number you provided [and verified it against IRS records on [date]].
Backup withholding stopped with the payment dated [date]. Amounts withheld between [start date] and [end date], totaling $[amount], have been paid to the IRS and will be shown in box 4 of your [year] Form [1099-NEC / 1099-MISC], which you can claim as tax paid on your return.
Questions: [name / department], [phone], [email].
[Signature block]
A general-purpose starting point, not legal advice. Your facts, and your counsel, control what you send.