The Internal Revenue Service (IRS) has adopted regulations authorizing filers of information returns to truncate a payee’s or other person’s nine-digit identifying number on payee statements and certain other documents. The goal of these amendments is to reduce the risk of identity theft that may stem from the inclusion of a taxpayer’s entire identifying number on a payee statement or other document.
Under the regulations, where not prohibited by the Internal Revenue Code, applicable regulations, other guidance published in the Internal Revenue Bulletin, forms, or instructions, these regulations allow use of a truncated taxpayer identification number (TTIN) in lieu of a taxpayer’s social security number (SSN), IRS individual taxpayer identification number (ITIN), IRS adoption taxpayer identification number (ATIN), or employer identification number (EIN) on payee statements and certain other documents. The TTIN displays only the last four digits of a taxpayer identifying number; either asterisks (*) or Xs replace the first five digits of the identifying number. The regulations affect persons that furnish or receive payee statements and other documents that the Internal Revenue Code, regulations, or other published guidance requires to be furnished to another person to the extent that a TTIN may appear in lieu of the SSN, ITIN, ATIN, or EIN of the payee or document recipient.
A TTIN may not be used (1) where prohibited by statute, regulation, other guidance published in the Internal Revenue Bulletin, form, or instructions; (2) where a statute, regulation, other guidance published in the Internal Revenue Bulletin, form, or instructions, specifically requires use of an SSN, ITIN, ATIN, or EIN; or (3) on any return or statement required to be filed with, or furnished to, the IRS. Further, a person may not truncate its own taxpayer identification number on any tax form, statement, or other document that person furnishes to another person. For example, an employer cannot use a TTIN in place of its EIN on a Form W-2, Wage and Tax Statement, that the employer furnishes to an employee; and a person may not use a TTIN in place of its TIN on a Form W-9, Request for Taxpayer Identification Number and Certification.
Because a TTIN is a permissible method of displaying the taxpayer identifying number, use of a TTIN when permitted by the final regulations satisfies the requirement to include a taxpayer identifying number on a document or statement. Use of a TTIN as permitted in the regulations will not result in application of any penalty (e.g., a penalty for failure to timely furnish a correct statement) for failure to include a taxpayer identifying number on any payee statement or other document.
The final regulations became effective on July 15, 2014, with amendments to the specific information reporting regulations generally effective for payee statements due after December 31, 2014.