[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR31.3406(b)(3)-4]

[Page 272]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 31_EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE--Table of Contents
 
              Subpart E_Collection of Income Tax at Source
 
Sec. 31.3406(b)(3)-4  Reportable payments of royalties.

    (a) Royalty payments subject to backup withholding. A payment of a 
kind, and to a payee, that is required to be reported under section 
6050N (relating to information reporting of payments of royalties) is a 
reportable payment for purposes of section 3406. See Sec. 31.6051-4 for 
the requirement to furnish a statement to the payee if tax is withheld 
under section 3406.
    (b) Amount subject to backup withholding. In general, the amount 
described in paragraph (a) of this section that is subject to 
withholding under section 3406 is the amount subject to reporting under 
section 6050N. However, if the reportable payment is for an oil or gas 
interest, the amount subject to withholding is the net amount the payee 
receives (i.e., the gross proceeds less production-related taxes such as 
state severance taxes).

[T.D. 8637, 60 FR 66119, Dec. 21, 1995]