Any person receiving a payment of winnings subject to withholding must furnish the payer a statement as required in paragraph (d) of this section. See paragraph (c)(5)(ii) of this section for a special rule relating to the time for making deposits of withheld amounts and filing the return with respect to those amounts. The tax must be deducted and withheld upon payment of the winnings by the person making the payment (“payer”). Every person, including the Government of the United States, a State, or a political subdivision thereof, or any instrumentality of any of the foregoing making any payment of “winnings subject to withholding” (defined in paragraph (b) of the section) must deduct and withhold a tax in an amount equal to the product of the third lowest rate of tax applicable under section 1(c) and the payment. (a) Withholding obligation-(1) General rule. § 31.3402(q)-1 Extension of withholding to certain gambling winnings.