Certified Payroll Professional Practice Exam 2025 - Free CPP Practice Questions and Study Guide

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Under what circumstance would the backup withholding rate be 28%?

When the payee provides their SS number

When the payee does not provide their SS number

When the payee does not provide their Social Security number, the backup withholding rate of 28% would apply. This is because the IRS requires payers to withhold taxes at a higher rate (28%) from payments made to individuals who do not provide their correct taxpayer identification number, typically their Social Security number. This measure is in place to ensure that individuals report their income accurately and pay their fair share of taxes. Therefore, option B is the correct answer in this case.

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When the payee provides a check

When the payee provides cash

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