IRS Pilot Program Will Allow Truncated Social Security Numbers on Information Returns

By Alistair M. Nevius, J.D.

On November 19, the IRS announced a pilot program aimed at deterring identity theft (Notice 2009-93). Under the program, filers of certain paper information returns will be allowed to truncate the payee’s Social Security number on the payee statement. The change affects statements for 2009 and 2010.

Only paper payee statements for forms in the 1098, 1099, and 5498 series are eligible for the program. Filers must meet certain requirements, spelled out in the notice, but if they do, they will be treated as having met the various IRS and Treasury requirements that a payee’s Social Security or taxpayer identification number be included on the statement.

The filer must truncate the nine-digit number by replacing the first five digits with an X or an asterisk. Thus, according to the notice, the sample Social Security number 123-45-6789 would be replaced with either XXX-XX-6789 or ***-**-6789.

The IRS has asked for comments on whether this change should be made mandatory, whether it should be expanded to other information returns, and whether it should be expanded to include electronically furnished statements.

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