When a person, such as an employer, makes payments to another person, they must withhold and then pay a specified percentage of this payment to the Internal Revenue Service (IRS). This is called backup withholding. These payments have conditions set by the IRS, and there are many variables regarding what type of payments backup withholding can apply to.

Backup withholding payments can apply to most payments that are reported on an IRS Form 1099. These can include interest payments and payments by brokers, as well as royalty payments. Other payments may include dividends, patronage dividends if at least half the payment is in money, rents, and profits. Commissions, fees, or payments for work undertaken as an independent contractor may also be liable to backup withholding.

There are certain cases for which backup withholding payments can be excluded. These include real estate transactions, abandonments, foreclosures of properties, and cancelled debts. Other exceptions are care benefits, fish purchases for cash, unemployment compensation, state or local income tax refunds, and distributions from an employee stock ownership plan (ESOP).

And this is adapted from the IRS site: 

Nonresident aliens are subject to backup withholding, and identified via Form W-8BEN.