When opening an account for an existing customer already on backup withholding due to a B or C notice, are Banks required to check b/u withholding status and automatically place the new account on backup withholding as well?

Yes - Just curious - what box did the customer check on the new W-9 for the new account?

The Q & A on backup withholding states:

18. Q. After I receive a CP2100 or CP2100A notice, when do I start and stop backup withholding?

A. You must backup withhold on all reportable payments to the payee after 30 business days after you have received the CP2100 or CP2100A Notice. You must stop backup withholding on payments within 30 calendar days after you have received the required certification (Form W-9) from the payee or TIN validation from the SSA or the IRS, if it was a second notification. At your option, you may start and stop backup withholding at any time during these 30 day periods.

I read this to indicate that all reportable payments to the "payee" are subject to backup withholding, not necessarily limited to the original account that may have triggered the b or c notice.

Actually we just had a situation with a customer who is on a C-notice. The branch wanted to know if the customer closed the existing account and opened a new one would the new one still be on withholding.
We put all our C-notices on the customer file, instead of the account for just this reason. That way all of the accounts using that tin will be on withholding, including any new accounts.
Our advice to the customer was to contact the IRS to get the C-notice removed.

Does the C-Notice apply to all customer accounts, even if the IRS specified an account number in their notice to us?