Walter Johnson has two accounts at First National Bank. His savings account was opened in 1975, and his money market savings account was opened in
1985.He has never supplied a TIN number to the bank. What must First National Bank do?
Walter Johnson has two accounts at First National Bank. His savings account was opened in 1975, and his money market savings account was opened in
1985.He has never supplied a TIN number to the bank. What must First National Bank do?
If a customer does not provide a Taxpayer Identification Number (TIN) for their accounts, the bank is obliged to withhold 28% of the payments on those accounts. Furthermore, the bank must annually request a TIN from the customer to comply with regulatory requirements. Therefore, First National Bank must withhold 28 percent of the payments on each account and annually request a TIN on the savings account.
When a customer does not provide a Taxpayer Identification Number (TIN) to the bank, the bank is required to withhold backup withholding at a rate of 28% from certain payments made to that customer. Additionally, the bank is required to annually request a TIN from the customer. In this scenario, Walter Johnson has not provided a TIN for either of his accounts at First National Bank. Therefore, the bank must withhold 28% of the payments on each account, and it must annually request a TIN on both accounts. Option A is incorrect because it does not mention the requirement to annually request a TIN. Option C is also incorrect because it does not mention the requirement to withhold backup withholding Option D is incorrect because the bank is not required to refuse to open future accounts without a TIN; however, it may be a bank policy to request a TIN for new accounts.