SECTION 2. BACKGROUND

.01 Section 3406(a)(1) provides, in part, that the payor shall deduct and withhold income tax from a reportable payment if either—

(1) the payee fails to furnish the payee’s TIN to the payor in the required manner, or

(2) the Secretary of the Treasury notifies the payor that the TIN furnished by the payee is incorrect.

.02 Section 31.3406(j)–1(a) of the Employment Tax Regulations provides that the Commissioner has the authority to establish TIN matching programs and may prescribe by revenue procedure or other

2003–8 I.R.B. 516 February 24, 2003

.02 Transmit only name/TIN combinations relating to accounts (as defined in section 3.05 of this revenue procedure) with respect to which a reportable payment is made, or is likely to be made, on or after the effective date of this revenue procedure;

.03 Transmit only name/TIN combinations that have not been previously transmitted by that participant to the Service for matching;

.04 Maintain the confidentiality of information obtained through TIN solicitation activities in accordance with the requirements of § 31.3406(f)–1 of the Employment Tax Regulations;

.05 Provide the Service with the information necessary to monitor the effectiveness of the Program.