FINAL IRS REGULATIONS PERMIT TRUNCATED SSN ON FORMS W-2

The Internal Revenue Service (IRS) has issued final regulations (TD 9861, Use of Truncated Taxpayer Identification Numbers on Forms W-2, Wage and Tax Statement, Furnished to Employees), which allow employers to truncate employees’ Social Security Numbers on copies of Forms W-2 that are furnished to employees, effective for Forms W-2 required to be furnished after 12/31/2020 (i.e., Forms W-2 for calendar year 2020).

Section 409 of the Protecting Americans from Tax Hikes (PATH) Act of 2015 (P. L. 114-113) authorized the IRS to permit employees’ Social Security Numbers to be truncated on Forms W-2 (e.g., XXX-XX-9999). However, IRS regulations were necessary to implement the provision.

Employers are not permitted to truncate their own Employer Identification Numbers (EINs) on Forms W-2 furnished to employees. In addition, employers may not truncate SSNs on Forms W-2 that are filed with the Social Security Administration or any state or local tax authority.

The IRS has permitted truncation of SSNs on Payee copies of Forms 1099 since 2010. The truncating of Social Security Numbers is permitted, but not required.

These new regulations should assist employers in helping their employees avoid problems related to identity theft. Truncation is permitted on the following copies of Forms W-2:

  • B — To Be Filed with Employee’s FEDERAL Tax Return
  • C — For EMPLOYEE’S RECORDS
  • 2 — To Be Filed with Employee’s State, City, or Local Income Tax Return
  • D — For Employer

If you find that you need help in complying with tax law, please do not hesitate to call Cantrell & Cantrell, PLLC, on of Houston’s premier tax law firms at 713-333-0555.