Election To Withhold Under Section 3406

If you are a PFFI that has made an election to withhold under section 3406 instead of withholding under chapter 4, use Form 945, Annual Return of Withheld Federal Income Tax , to report tax withheld on a withholdable payment that is also a reportable payment made to any of your recalcitrant account holders that are also U.S. nonexempt recipients subject to backup withholding. Also, use Form 945 to report tax withheld on a withholdable payment that is also a reportable payment made to recalcitrant account holders of a PFFI or RDCFFI that is an NQI, NWP, or NWT, or a QI that elects to be withheld upon under section 1471(b)(3), and from whom you received a withholding statement that indicates that such FFI has elected for withholding under section 3406 to apply instead of withholding under chapter 4 with respect to one or more recalcitrant account holders. See Regulations sections 1.1471-4(b) and 1.1474-1(d)(4)(i) (B). A withholding QI, WP, or WT that is an FFI should also use Form 945 if it elects to withhold under section 3406 on withholdable payments made to certain recalcitrant account holders.