New Proposed Rules On W-2s And Taxpayer Identification Numbers
Identity theft is a real threat. With loads of taxpayer information on various tax forms, tax officials have been mindful of this threat and related risk. Newly proposed regulations seek to reduce that risk by limiting the taxpayer identification numbers printed on Forms W-2.
Currently, the Treasury Regulations require that a W-2 provide, among other things, an employee’s Social Security number. Indeed, until recently, the underlying statute (I.R.C. § 6051) required the provision of a Social Security number on a W-2.
However, the Protecting Americans from Tax Hikes (PATH) Act of 2015 amended section 6051, which now requires “an identifying number for the employee . . . .” Therefore, because Social Security numbers are no longer statutorily required on Forms W-2, these new regulations are proposed to reflect that statutory change.
In a nutshell, the proposed regulations allow employers to use “truncated” social security numbers as a truncated taxpayer identification number (TTIN) on Forms W-2 that are furnished to employees (under § 6051).
With a TTIN, the first five digits of the nine-digit number are replaced by asterisks or Xs; as an example, a TTIN (for a SSN) would appear as XXX–XX–1234 or ***–**–1234.
However, the new truncated rules will not apply to copies of Forms W-2 filed with the Social Security Administration or the IRS, as those agencies needs to be able to identify individuals to carry out their functions.
Interestingly, the proposed regulations provide that they will not apply to Forms W-2 until 2019 in order to give time to state tax administrators to develop systems to process forms with truncated SSNs.
At McVay Business Services we don't know how this new ruling will be carried out. As always we will update you on any new IRS rulings and any changes to QuickBooks Online for your business. Mike McVay, 850-725-5696. www.QuickBooksPensacola.com - www.PensacolaFLTax.com
Currently, the Treasury Regulations require that a W-2 provide, among other things, an employee’s Social Security number. Indeed, until recently, the underlying statute (I.R.C. § 6051) required the provision of a Social Security number on a W-2.
However, the Protecting Americans from Tax Hikes (PATH) Act of 2015 amended section 6051, which now requires “an identifying number for the employee . . . .” Therefore, because Social Security numbers are no longer statutorily required on Forms W-2, these new regulations are proposed to reflect that statutory change.
In a nutshell, the proposed regulations allow employers to use “truncated” social security numbers as a truncated taxpayer identification number (TTIN) on Forms W-2 that are furnished to employees (under § 6051).
With a TTIN, the first five digits of the nine-digit number are replaced by asterisks or Xs; as an example, a TTIN (for a SSN) would appear as XXX–XX–1234 or ***–**–1234.
However, the new truncated rules will not apply to copies of Forms W-2 filed with the Social Security Administration or the IRS, as those agencies needs to be able to identify individuals to carry out their functions.
Interestingly, the proposed regulations provide that they will not apply to Forms W-2 until 2019 in order to give time to state tax administrators to develop systems to process forms with truncated SSNs.
At McVay Business Services we don't know how this new ruling will be carried out. As always we will update you on any new IRS rulings and any changes to QuickBooks Online for your business. Mike McVay, 850-725-5696. www.QuickBooksPensacola.com - www.PensacolaFLTax.com
