November 17, 1992
TO: TAX MEMBERS NO. 76-92
OPERATIONS MEMBERS NO. 47-92
CLOSED-END FUND MEMBERS NO. 46-92
UNIT INVESTMENT TRUST MEMBERS NO. 58-92
TRANSFER AGENT ADVISORY COMMITTEE NO. 71-92
RE: IRS ANNOUNCEMENT ON INCREASED BACKUP WITHHOLDING RATE
__________________________________________________________
As we previously informed you, the energy bill signed into
law on October 24 increased the rate of backup withholding under
section 3406 of the Internal Revenue Code from 20 percent to 31
percent for payments made on or after January 1, 1993. (See
Institute Memorandum to Tax Members No. 68-92, Operations Members
No. 40-92, Transfer Agent Advisory Committee No. 63-92 and
Institutional Funds Committee No. 24-92, dated October 26, 1992.)
The attached IRS announcement reminds payors of the new rate and
describes the four situations (failure to provide taxpayer
identification number, etc.) in which backup withholding
generally applies.
We will keep you informed of developments.
Keith D. Lawson
Associate Counsel - Tax
Attachment