The backup withholding notification from IRS I received lists only one account for the customer. However, he has that account and 2 CD's. The notice reads "This is your notice to begin backup withholding at a rate of 28% on the dividend and/or interest payments you make to these taxpayers." No where does it say on the notice that it only applies to that account. No where that I can find on the IRS website does it say only the account listed OR all accounts for the taxpayer. I called IRS and after much frustration with the answering agent who could not even understand my question to begin with (she wanted to talk about it as though it were a levy), she stated it was across all accounts. Do you agree?

I'm sure you received a "C" notice - right. The IRS instructions are pretty clear - it would apply to all accounts:

“C” Notice

If the IRS sends you a “C” notice indicating notified payee underreporting, you must withhold on any reportable payment no later than 30 days after receipt. The IRS will notify you when to stop withholding.

http://www.irs.gov/govt/fslg/article/0,,id=110339,00.html

The IRS is telling you to withhold on any interest or dividends you make to your customer until they tell you to stop. So, yes, I agree with the IRS representative.

So out of curiosity, and IF there's any plausible explanation, why do they put an account number on the "C" notice?

It's a reference point to allow you (if it's one of your accounts) to search out the customer. Most often, we find that it isn't even a valid account number for us. The IRS is usually working on data that is about three years old. Sometimes that account number doesn't even match up with the institution's numbering format in which case it could be a number from a different institution or something internal to the IRS.