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U.S. Federal Income Tax

Subjugation by taxation

A Reportable Payment Is Required to be Shown on a Return

Table of Contents

Internal Revenue Code
Sec. 3406. Backup withholding
(b) Reportable payment, etc.

For purposes of this section - (1) Reportable payment
The term "reportable payment" means - (A) any reportable interest or dividend payment, and (B) any other reportable payment.

        The reportable interest and dividend payments are omitted from this examination because we are only interested in how this law affects our compensation for labor.

Internal Revenue Code
Sec. 3406. Backup withholding
(b) Reportable payment, etc.
(3) Other reportable payment

The term "other reportable payment" means any payment of a kind, and to a payee, required to be shown on a return required under - (A) section 6041 (relating to certain information at source), (B) section 6041A(a) (relating to payments of remuneration for services), (C) section 6045 (relating to returns of brokers), (D) section 6050A (relating to reporting requirements of certain fishing boat operators), but only to the extent such payment is in money and represents a share of the proceeds of the catch, or (E) section 6050N (relating to payments of royalties).

        The term "other reportable payment" means any "payment of a kind" "required to be shown on a return."  Does this section (3406) tell us what "kind" of payment is a "payment of a kind" required to be shown on a return?

        That means we will have to look at sections 6041, 6041A and their regulations to see what kinds of payments are "payments of a kind" required to be reported.  The pages that do that will follow shortly in this chapter.

        The chain of meanings thus far is:
  • Reportable payment means:
  • Other reportable payment which means:
  • Payment of a kind required to be shown on a return which means:
  • A payment required to be shown under section 6041 and/or;
  • A payment required to be shown under section 6041A(a).

Treasury Regulations
Sec. 31.3406(b)(3)-1  Reportable payments of rents, commissions, nonemployee compensation, etc.

(a) Section 6041 and 6041A(a) payments subject to backup withholding.

A payment of a kind, and to a payee, that is required to be reported under section 6041 (relating to information reporting of rents, commissions, nonemployee compensation, etc.) or a payment that is required to be reported under section 6041A(a) (relating to information reporting of payments to nonemployees for services) is a reportable payment for purposes of section 3406.

  • Any particular payment that is NOT required to be reported under section 6041 is NOT "a payment of a kind" that is a "reportable payment".
  • Any particular payment that is NOT required to be reported under section 6041A(a) is NOT "a payment of a kind" that is a "reportable payment".

Treasury Regulations
Sec. 31.3406(b)(3)-1  Reportable payments of rents, commissions, nonemployee compensation, etc.

(b) Amount subject to backup withholding--(1) In general. The amount of a payment described in paragraph (a) of this section subject to withholding under section 3406 is the amount subject to reporting under section 6041 or section 6041A(a).

        The only payments subject to backup withholding are the following payments:
  • A payment required to be reported under section 6041
  • A payment required to be reported under section 6041A(a)

Internal Revenue Code
Sec. 3406. Backup withholding

(6) Other reportable payments include payments described in section 6041(a) or 6041A(a) only where aggregate for calendar year is $600 or more

Any payment of a kind required to be shown on a return required under section 6041(a) or 6041A(a) which is made during any calendar year shall be treated as a reportable payment only if - [such payment meets the criteria omitted.]

        "Payments of a kind" required to be shown on a return (once we actually know what "kind" of payments those are) are only treated as a reportable payment if such payments meet the criteria omitted as not important to the purpose of this web page.  We have been told three times on this page and once on the prior page that sections 6041 & 6041A are where we find out what "kinds" of payments are "payments of a kind" required to be shown on an information return and subject to backup withholding.


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