Certified Payroll Professional Practice Exam

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Prepare for the Certified Payroll Professional Exam with comprehensive flashcards and multiple choice questions. Each question is accompanied by detailed hints and explanations to aid your understanding. Get ready to ace your Certified Payroll Professional Exam!

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

  1. When the payee provides their SS number

  2. When the payee does not provide their SS number

  3. When the payee provides a check

  4. When the payee provides cash

The correct answer is: 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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