As the IRS increases its efforts to fight identity theft, the agency has proposed regulations that would allow employers to use shortened versions of employees’ Social Security numbers on Form W-2.
REG-105004-16 would amend Sections 6051 and 6052 of the Internal Revenue Code to allow employers to voluntarily truncate employees’ Social Security numbers.
The proposed amendments also would affect Section 6109 to clarify the allowance of the truncation rules to Form W-2, and add an example of the change. In general, only the last four digits of Social Security numbers would be reflected on the forms.
The IRS requests that written or electronic comments or requests for a public hearing be received by Dec. 18 to the address listed in the above link.
Final regulations regarding the use of truncated taxpayer identification numbers (TTINs) on certain documents were published in the Federal Register in 2014 in response to concerns about identity theft.
Section 301.6109-4(b) generally provides that a TTIN may be used to identify anyone on any statement or other document that Internal Revenue laws require to be given to another person. Under Section 301.6109-4(a), a TTIN is a taxpayer’s Social Security number, individual taxpayer identification number, adoption taxpayer identification number, or employer identification number that has the first five digits of the nine-digit number replaced with Xs or asterisks.
Section 301.6109-4(b)(2)(ii) bans the use of TTINs if a law, regulation or other guidance published in the Internal Revenue Bulletin, form or instructions requires the use of a Social Security number.
Section 301.6109-4(b)(2)(iii) bans the use of TTINs on any document that is required to be filed with the IRS.
Prior to an amendment by the Protecting Americans from Tax Hikes Act of 2015, employers were required to include employees’ Social Security numbers on Form W-2 given to them. The law amended Section 6051(a)(2) by eliminating Social Security numbers from the information required on Form W-2 and requiring “an identifying number for the employee” instead.
About Terry Sheridan
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.