Regulatory action allows for truncated SSNs


A significant change is coming to W-2s that’ll impact how you prepare forms for employees.


The IRS just issued a proposed rule that allows for the use of truncated Social Security Numbers (SSN) on employees’ copies of Forms W-2s.


Currently, you can use truncated taxpayer identification numbers (TTIN) on some documents as a means for preventing identity theft. But without an IRS reg in place, W-2s haven’t been on that list of forms.


Here’s the latest:


When and What


Mark this date on your calendar: Jan 1, 2019. Per the proposed rule, published in the Federal Register, that’s when employers can start using TTINs on employees’ copies of Forms W-2.


That means for Tax Year 2018, instead of giving works W-2s that contain their full SSN, you’ll be able to use a TTIN to replace the first five digits with X’s or asterisks.


If you choose to use the truncated SSN, only the last four digits will be shown on the forms. Examples XXX-XX-1234 or ***-**-1234.


Guidelines for submission


Although the proposed rule says you can give employees W-2s with TTINs, you’ll still have to submit W-2s with employees’ full SSNs to the SSA, per federal law, so the feds can verify each individual’s identity.


Similar rules apply to W-2s that contain amounts for group-term life insurance and third-party sick pay.


Additional changes


In addition to allowing for the use of TTINs on W-2s, the proposed rule also seeks to amend the law to remove irrelevant and outdated provisions that no longer apply to the form, including inaccurate guidance about penalties.


The IRS is accepting comments on the rule until Dec, 2017.


More info