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CP542 notice: what it means and what to do
Got an IRS CP542 notice? Here is what it means, your deadline, what to check before you answer, and how to reply. Check your own letter free: it stays on your phone.
Check my CP542 notice freeWhat the IRS says this notice is about
You’re no longer subject to backup withholding. We’ve told your payers of interest, dividends, and patronage dividends to stop backup withholding.
What you need to do
- Make sure payers of interest or dividend income received our notice to stop backup withholding. If they didn’t, give them a copy of this notice by December 31. They’ll stop withholding within 30 days if you’re not subject to backup withholding for some other reason.
- Keep this notice for your records.
Your deadline
The IRS page for this notice mentions 30 days. Always use the date printed on your own notice.
What to check before you answer
Is this letter really from the IRS?
The IRS writes first by mail. A real letter shows a notice or letter number, your name and part of your tax ID number. The IRS does not ask for payment by gift card, crypto or wire transfer. If in doubt, sign in to your IRS online account, where many notices are listed.
You may want to
- Read about backup withholding .
- Review Publication 1335, Backup Withholding Questions and Answers PDF .
- Use IRS Online Account to check your payoff amount, payment history, or to view transcripts.
Common questions
What is backup withholding? (updated Mar. 25, 2026)
It’s a withholding (deduction) from certain payments (mostly interest and dividends) that payers must take when instructed by us.
What is the backup withholding rate? (updated Mar. 25, 2026)
Currently, it’s 24%. It can increase or decrease with tax laws.
How long will the payer continue backup withholding? (updated Mar. 25, 2026)
Until we instruct them to stop, or until you give them written certification from us that you’re no longer subject to backup withholding.
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