IRS issues proposed regs on truncated SSNs

The IRS has issued proposed regulations on truncated social security numbers. The IRS wants to aid employers’ efforts to protect employees from identity theft. The proposed regulations would amend existing regulations to permit employers to voluntarily truncate employees’ social security numbers (SSNs) on copies of Forms W-2, Wage and Tax Statement, that are furnished to employees so that the truncated SSNs appear in the form of IRS truncated taxpayer identification numbers (TTINs). In addition, the proposed regulations also would amend the regulations under Code Sec. 6109 to clarify the application of the truncation rules to Forms W-2 and to add an example illustrating the application of these rules.

Background

Prior to being amended by the Protecting Americans from Tax Hikes (PATH) Act of 2015, Public Law No. 114-113, div. Q, title IV, 129 Stat. 2242, section 6051(a)(2) specifically required employers to include their employees’ SSNs on copies of Forms W- 2 that are furnished to employees. In addition, current regulations under §31.6051-1, as well as forms and instructions, require employers to include their employees’ SSNs on copies of Forms W-2 that are furnished to employees. Section 409 of the PATH Act amended section 6051(a)(2) by striking “his social security account number” from the list of information required on Form W-2 and inserting “an identifying number for the employee’ instead. This statutory amendment is effective for statements issued after December 18, 2015, the date that the PATH Act was signed into law. Because an SSN is no longer required by section 6051, the Treasury Department and the IRS propose amending the regulations to permit employers to truncate employees’ SSNs to appear in the form of TTINs on copies of Forms W-2 that are furnished to employees. If the proposed regulations are finalized without change, the IRS intends to incorporate the revised regulations into forms and instructions, permitting employers to use a TTIN on the employee copy of the Form W-2. See §301.6109-4(b)(2)(i) and (ii).

Examples

Example 1. Pursuant to section 6051(d) and §31.6051-2(a) of this chapter, employer files the Social Security Administration copy of employee’s Form W-2, Wage and Tax Statement, with the Social Security Administration. Employer may not truncate any identifying number on the Social Security Administration copy. Pursuant to section 6051(a) and §31.6051-1(a)(1)(i) of this chapter, Employer furnishes copies of Form W-2 to employee. There are no applicable statutes, regulations, other published guidance, forms, or instructions that prohibit use of a TTIN on Form W-2, and §31.6051-1(a)(1)(i) specifically permits truncating employees’ SSNs. Accordingly, Employer may truncate Employee’s SSN to appear in the form of a TTIN on copies of Form W-2 furnished to Employee. Employer may not truncate its own employer identification number (EIN) on copies of Form W-2 furnished to Employee.
Example 2. On April 5, year 1, a donor contributes a used car with a blue book value of $1100 to a charitable organization. On April 20, year 1, the charitable organization sends donor copies B and C of the Form 1098-C as a contemporaneous written acknowledgment of the $1100 contribution as required by section 170(f)(12). In late- February, year 2, the charitable organization prepares and files copy A of Form 1098-C with the IRS, reporting the donor’s donation of a qualified vehicle in year 1. The charitable organization may truncate the donor’s SSN to appear in the form of a TTIN in the Donor’s Identification Number box on copies B and C of the Form 1098-C because copies B and C of the Form 1098-C are documents required by the Internal Revenue Code and regulations to be furnished to another person; there are no applicable statutes, regulations, other published guidance, forms or instructions that prohibit the use of a TTIN on those copies; and there are no applicable statutes, regulations, other published guidance, forms, or instructions that specifically require use of an SSN or other identifying number on those copies. The charitable organization may not truncate its own EIN on copies B and C of the Form 1098-C because a person cannot truncate its own taxpayer identifying number on any statement or other document the person furnishes to another person. The charitable organization may not truncate any identifying number on copy A of the Form 1098-C because copy A is required to be filed with the IRS.

Comments are invited

Written or electronic comments and requests for a public hearing must be received by December 18, 2017. Submissions should be sent to: CC:PA:LPD:PR (REG-105004-16), room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-105004-16), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington, DC, or sent via the Federal eRulemaking Portal at www.regulations.gov (REG-105004-16). FOR FURTHER INFORMATION CONTACT: Concerning these proposed regulations, Eliezer Mishory, (202) 317-6844; concerning submissions of comments and/or requests for a hearing, Regina Johnson (202) 317-6901 (not toll-free numbers). (IRS Proposed Regs. RIN 1545-BN35, September 20, 2017.)

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