A IRS C-Notice is sent from the IRS instructing a financial or banking institution to backup withhold on reportable payments, specifically interest, dividends, short-term capital gains, long term capital gains, and redemption’s due to a payee’s under reporting of income. IRS is stating to keep a tight reign of these issues due to many taxpayers owing back taxes.
based on this there is no reason for the fund or brokerage to bar selling. they do have to withhold on the sales proceeds. if there was backup withholding on your dividends, it should have been reported on 1099-div and you report it on your return so you get credit for it.
