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In the IRS’s own words · not reviewed by VALID
CP542 notice explained, in the IRS’s own words
You’re no longer subject to backup withholding. We’ve told your payers of interest, dividends, and patronage dividends to stop backup withholding.
Read the full CP542 page on irs.gov ↗
What this notice is about
You’re no longer subject to backup withholding. We’ve told your payers of interest, dividends, and patronage dividends to stop backup withholding.
What you need to do
- Make sure payers of interest or dividend income received our notice to stop backup withholding. If they didn’t, give them a copy of this notice by December 31. They’ll stop withholding within 30 days if you’re not subject to backup withholding for some other reason.
- Keep this notice for your records.
You may want to
- Read about backup withholding.
- Review Publication 1335, Backup Withholding Questions and Answers PDF.
- Use IRS Online Account to check your payoff amount, payment history, or to view transcripts.
What is backup withholding?
It’s a withholding (deduction) from certain payments (mostly interest and dividends) that payers must take when instructed by us.
What is the backup withholding rate?
Currently, it’s 24%. It can increase or decrease with tax laws.
How long will the payer continue backup withholding?
Until we instruct them to stop, or until you give them written certification from us that you’re no longer subject to backup withholding.
Tips for next year
- File your tax return timely.
- Report all interest and dividend income.
- Pay all taxes due.
Reference tools
- Publication 1, Your Rights as a Taxpayer
- Publication 17, Your Federal Income Tax
- Full list of tax forms and instructions
Need help?
- You can authorize someone to contact the IRS on your behalf.
- If you can’t find what you need online, call the IRS number on your notice or letter. If you didn’t receive a letter or notice, use telephone assistance.
- If you can't resolve the penalty on your own, contact Taxpayer Advocate Service, an independent organization within IRS.
What to do next
- Write down the date on the letter today.
- Look the number up on irs.gov yourself. Don’t trust a link or phone number from anyone else.
- If it says you owe money or proposes changes to your return, take it to a licensed CPA, EA or tax attorney before that date.
Not advice. Not a filing. Verify with a licensed professional. Rules change by year and facts.