Interest and dividend backup withholding applies to new accounts and instruments unless payee certifies that he is not subject to such withholding

(A) In general Subsection (a)(1)(D) shall apply to any reportable interest or dividend payment to any payee on any readily tradable instrument if (and only if) the payor was notified by a broker under subparagraph (B) or no certification was provided to the payor by the payee under paragraph (1) and— (i) such instrument was acquired directly by the payee from the payor, or (ii) such instrument is held by the payor as nominee for the payee.

(B) Broker notifies payor If— (i) a payee acquires any readily tradable instrument through a broker, and (ii) with respect to such acquisition— (I) the payee fails to furnish his TIN to the broker in the manner required under subsection (a)(1)(A), (II) the Secretary notifies such broker before such acquisition that the TIN furnished by the payee is incorrect, (III) the Secretary notifies such broker before such acquisition that such payee is subject to withholding under subsection (a)(1)(C), or (IV) the payee does not provide a certification to such broker under subparagraph (C), such broker shall, within such period as the Secretary may prescribe by regulations (but not later than 15 days after such acquisition), notify the payor that such payee is subject to withholding under subparagraph (A), (B), (C), or (D) of subsection (a)(1), respectively.

(C) Time for payee to provide certification to broker In the case of any readily tradable instrument acquired by a payee through a broker, the certification described in paragraph (1) may be provided by the payee to such broker— (i) at any time after the payee’s account with the broker was established and before the acquisition of such instrument, or (ii) in connection with the acquisition of such instrument.

This subsection and subsection (a)(1)(D) shall not apply to any reportable interest or dividend payment which is paid or credited—

(A) in the case of interest or any other amount of a kind reportable under section 6049, with respect to any account (whatever called) established before January 1, 1984 , or with respect to any instrument acquired before January 1, 1984 ,

(B) in the case of dividends or any other amount reportable under section 6042, on any stock or other instrument acquired before January 1, 1984 , or

(C) in the case of patronage dividends or other amounts of a kind reportable under section 6044, with respect to any membership acquired, or contract entered into, before January 1, 1984 .

Subparagraph (B) of paragraph (2) shall not apply with respect to a readily tradable instrument which was acquired through an account with a broker if—

(A) such account was established before January 1, 1984 , and

(B) during 1983, such broker bought or sold instruments for the payee (or acted as a nominee for the payee) through such account.

The preceding sentence shall not apply with respect to any readily tradable instrument acquired through such account after the broker was notified by the Secretary that the payee is subject to withholding under subsection (a)(1)(C).