The U.S. Treasury Department and IRS today released for publication in the Federal Register a notice of proposed rulemaking (REG-105004-16) that proposes changes to existing regulations to allow the use of truncated social security numbers—that is, truncated taxpayer identification numbers (TTINs)—on statements that employers furnish to their employees, specifically on Form W-2.
The goal of these proposed regulations [PDF 307 KB] is to aid employer efforts to protect their employees from identity theft. Comments about these proposed regulations and requests for a public hearing must be received by December 18, 2017.
Employers use Form W-2, Wage and Tax Statement, as provided to each employee, to show that employee’s total amount of wages and the amounts of tax deducted and withheld from those wages (and other information) for the calendar year.
Changes made under the Protecting Americans from Tax Hikes (PATH) Act of 2015, replaced a requirement that a social security number be included on a Form W-2 with a provision that “an identifying number for the employee” instead be required on Form W-2. Because a social security number is no longer required by statute, today’s proposed regulations permit employers to truncate the employees’ social security numbers as TTINs on copies of Forms W-2 provided to employees.
Also permitted is the use of TTINs on copies of Forms W-2 furnished to payees that report third-party sick pay as well as copies of Forms W-2 furnished to employees to report wages in the form of group-term life insurance.
However, the proposed regulations clarify that employers may not truncate an employee’s social security number to appear in the form of a TTIN on a copy of a Form W-2 that is filed with the Social Security Administration.
The proposed regulations will be effective on the date when final regulations adopting these rules are finalized and published in the Federal Register.
The preamble states that to allow state tax administrators additional time to develop systems to process copies of Forms W-2 filed with state income tax returns that may have TTINs, the proposed regulations will not apply to Forms W-2 required to be furnished before January 1, 2019. Thus, as proposed, the regulations would apply, at the earliest, to statements required to be filed and furnished after December 31, 2018.
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.