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CP543 notice: what it means and what to do
Got an IRS CP543 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 CP543 notice freeWhat the IRS says this notice is about
This notice informs you that you must begin backup withholding (BWH) interest or dividend income for the payees (taxpayers) listed on your notice. The taxpayers listed on your notice owe money to the IRS. As a payer, you can withhold some of their income to pay off their balance.
What you need to do
- Start BWH at a rate of 28% for dividends, patronage dividends and interest payments you make to the taxpayers listed on your notice. You must begin BWH within 30 days of your notice date.
- Continue until we tell you in writing to stop.
- Failure to do so may result in a tax liability and criminal or civil penalties.
- Report your withholding on Form 945, Annual Return of Withheld Federal Income Tax .
- Protect the payee's (taxpayer's) information or you could be subject to civil damages for unauthorized disclosure (Internal Revenue Code Section 7431).
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
You may be able to remove the penalties
If you had no penalties in the 3 tax years before, filed all required returns, and paid or arranged to pay the tax, the IRS First-Time Abatement policy can remove failure-to-file and failure-to-pay penalties. You can ask in writing or by phone.
Cannot pay it all now? Ask for a payment plan
You can apply for a payment plan on irs.gov. Interest keeps running until the balance is paid, so pay what you can now.
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 BWH .
- Review Publication 1335, Underreporter Backup Withholding Questions and Answers PDF .
- View your payoff amount, payment history, or order transcripts using the Tax Account tool.
- Review Internal Revenue Code (IRC) sections relative to BWH: IRC Sections 3403,6651,6656,7201,7202, and 7203.
Common questions
What is BWH? (updated Oct. 29, 2025)
This is when we instruct the payers of certain types of income (mostly interest and dividends) to withhold a percentage of tax from future payments.
What is the BWH rate? (updated Oct. 29, 2025)
The current rate is 28% and can increase or decrease with the tax laws.
How long will the payers continue BWH? (updated Oct. 29, 2025)
The payers should continue until we tell them to stop or until the payee shows you written certification from us that the payee isn’t subject to BWH anymore.
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