IRS Proposes Rules for Truncating Taxpayer Identification Numbers

By Sally P. Schreiber, J.D.

Regulations

The IRS issued proposed regulations (REG-148873-09) that permit filers of information returns to use truncated taxpayer identification numbers (TTINs) when issuing payee statements in the Form 1099, 1098, and 5498 series (with the exception of Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, because that form is an acknowledgment). The regulations make permanent a pilot program under Notice 2011-38, which will be obsolete when the final regulations are published.

A TTIN is an individual’s Social Security number (SSN), individual taxpayer identification number (ITIN), or adoption taxpayer identification number (ATIN) that is truncated by replacing the first five digits of the nine-digit number with X’s or asterisks. It does not include employer identification numbers.

The TTIN program is voluntary for filers. While it permits filers to truncate numbers on payee statements, it does not permit them to truncate numbers on forms filed with the IRS. It also does not allow the use of a TTIN on Form W-2, Wage and Tax Statement , because Sec. 6051(a)(2) requires that form, when furnished to employees, to show the name of the employee “and his social security account number.” However, filers may now use TTINs on electronically furnished payee statements.

The regulations will be effective when published in the Federal Register as final regulations; however, affected filers may rely on the proposed regulations until the final regulations are published.

 

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