Final Regulations Allow Truncated TINs on Forms W-2 Furnished to Employees
Final regulations allow employers to voluntarily truncate employees’ social security numbers (SSNs) on copies of Forms W-2, Wage and Tax Statement, furnished to employees. The truncated SSNs appear on the forms as IRS truncated taxpayer identification numbers (TTINs). The regulations also clarify and provide an example of how the truncation rules apply to Forms W-2.
The Protecting Americans from Tax Hikes (PATH) Act of 2015 ( P.L. 114-113) amended Code Sec. 6051(a)(2) by replacing the requirement that employers include employees’ SSNs on copies of Forms W-2 furnished to employees with a requirement to use an "identifying number for the employee."Because the SSN was no longer required to appear on Forms W-2 furnished to employees, the IRS published proposed regulations in 2017 to allow employers to truncate employees’ SSNs on those Forms W-2 ( REG-105004-16). The amendments were intended to aid employers’ efforts to protect employees from identity theft.
The final regulations adopt the proposed regulations without substantive changes to the content of the rules.
SSN Truncation on Forms W-2
The final regulations permit employers to truncate employees’ SSNs on copies of:
Forms W-2 furnished to employees to report wages paid, employment taxes withheld, etc.;
Forms W-2 furnished to employees to report wages paid in the form of group-term life insurance;
Forms W-2 furnished to payees to report third-party sick pay; and
Forms W-2c furnished to correct errors on Forms W-2.
The regulations do not apply to any other forms. Also, truncation is not mandatory; the regulations permit truncation but do not require it.
Under the general truncation rules, a TTIN cannot be used on a statement or document if a statute, regulation, other guidance published in the Internal Revenue Bulletin, form, or instructions:
specifically requires use of an SSN, IRS individual taxpayer identification number (ITIN), IRS adoption taxpayer identification number (ATIN), or IRS employer identification number (EIN); and
does not specifically permit truncation.
For instance, an employer cannot truncate an employee’s SSN on copies of Forms W-2 filed with the Social Security Administration.
The IRS intends to incorporate the revised regulations into forms and instructions.
Effective Date; Applicability Date
The final regulations are effective on July 3, 2019, but when they apply varies. Reg. §31.6051-1, Reg. §31.6051-3, and Reg. §1.6052-2, as amended, apply for statements required to be filed and furnished under Code Sec. 6051 and Code Sec. 6052 after December 31, 2020. Reg. §31.6051-2, as amended, applies on July 3, 2019. Reg. §301.6109-4, as amended, applies to returns, statements, and other documents required to be filed or furnished after December 31, 2020.