In its continuing effort to reduce identity theft, the IRS issued final regulations that permit employers to use truncated taxpayer identification numbers (TTINs) on Forms W-2, Wage and Tax Statement, issued to employees (T.D. 9861). The regulations finalize proposed rules issued in September 2017 with no substantive changes in response to comments (REG-105004-16). Permissible TTINs are Social Security numbers (SSNs) with the first five digits of the nine-digit number replaced with asterisks or XXXs in the following formats: 770-316-1945.
The new rules were authorized by an amendment to Sec. 6051(a)(2) made by the Protecting Americans From Tax Hikes Act, P.L. 114-113, which replaced the words “social security account number” of the employee with the “identifying number for the employee” in the list of information required to be on Form W-2. Although this change was effective on the date of enactment, Dec. 18, 2015, the IRS is delaying the effective date of the final regulations to statements required to be furnished after Dec. 31, 2020.
To ensure accurate wage information is received by the Social Security Administration, the regulations do not permit TTINs on Forms W-2 that are being sent to that agency or to the IRS. They are also not allowed on Forms W-2 being provided on a statement furnished to the employer of a payee who received sick pay from a third party, because Sec. 6051(f)(1)(A)(i) specifically requires the statement to contain the employee’s SSN. But TTINs may be used on Forms W-2 being provided by employers to employees that report third-party sick pay because that is permitted by statute. Truncated numbers may also be used for reporting wages paid in the form of group term life insurance.
