Barry Schwartz points to a thread on WebmasterWorld in which much confusion is swirling over the fact that Google withheld tax from some (but not all) of the February Adsense income checks. No communication from Google on this issue for some time, either before the checks were mailed or in response to confused and upset AdSense partners. Of the many possibilities suggested for this startling development (are AdSense partners suddenly employees of Google?), the most reasonable was that the IRS took backup withholding in situations where there is a tax-payment issue, such as underpayment of quarterly estimates. Indeed, a few hours ago, one member posted this response from Google:
"According to the tax information submitted in your Google AdSense account
on Form W-9, your earnings are subject to tax withholding. As a result, we
are required by the IRS to withhold 28% of your Google AdSense income.
Although we were unable to automatically withhold federal taxes from your
Google AdSense payments in the past, this functionality was added as part
of recent enhancements to our payment system. If you have indicated that
you are subject to tax withholding, you will see a line item for tax
withholding on your Payment History page."







