W-2/1099 masking of SSN digits

[BLACK BART]

On the subject of W-2/1099s, it seems like I read/heard something/somewhere about IRS wanting us to blank out all but the last four digits of the SSN on customer copies (but not the IRS copy).  I don't remember if it was just a suggestion or a mandate for the future, but I just received my 2016 W-2 software and it doesn't have the option.  I can't find anything on the IRS website. Does anyone know if that's in the works or what the status is?

[Medlin Software, Dennis]

From the IRS W-2 instructions:

Social security numbers. Do not truncate social
security numbers shown on Forms W-2, W-2AS, W-2GU,
and W-2VI. Social security numbers are required on
Forms W-2. See Taxpayer identification numbers, later.
See also Regulations section 301.6109-(4)(b)(2).
Filers of other forms, such as certain Forms 1099/1098,
may truncate the social security number (XXX-XX-4567)
to combat identity theft.

[Max W]

Truncating SSN's on W-2's is now allowed for upcoming years.

Some companies jumped the gun last year as I saw numerous truncated W-2's and 1099R's.

http://www.bna.com/irs-allow-truncated-n57982066286/

[Medlin Software, Dennis]

Your link article was dated in January 2016, and says the rules "may" be updated, not that they have or will be updated.  I am going with the current W-2 instructions since they are very clear, and since the truncate regulations defer to the specific rules for the specific document..

Emphasis added:

"The regulations (TD 9675) that allow truncated taxpayer identification numbers to be used on Forms 1099-MISC may be updated to include authorization for truncated identification numbers on Forms W-2, said Nancy Rose, senior counsel in the IRS's Office of Chief Counsel. "

[Medlin Software, Dennis]

https://www.irs.gov/government-entities/federal-state-local-governments/truncated-taxpayer-identification-numbers

• You may not truncate on any forms filed with the IRS (Copy A) or with state or local governments.
• You cannot truncate your own identification number.
• These rules do not apply to Form W-2.

emphasis added

 

[Medlin Software, Dennis]

Pondering the issue personally, meaning what would I do if there was an option to truncate?  I would not.  Why?  It is likely the one and only time each year the employee gets the opportunity to make sure the employer has the proper SSN.  Not all employers give the employee a chance to verify the SSN in their payroll system before Copy A is submitted.

[RitaB]

And there's that one employee who sees their SSN on every check stub for six years and on six W-2s, and never notices it's wrong, and calls me because her tax preparer, who should be ME, caught it in year six, but I digress.

[Max W]

It has been signed into law awaiting IRS regs. many of which come after tax season and the end of the year.

It makes sense if the object is to prevent ID theft as W-2's are so numerous, possibly more than the rest of the forms combined.

https://www.adp.com/-/media/Eye on Washington/EoW YEL.ashx?la=en

[Medlin Software, Dennis]

Your link also does not say it will apply to W-2 forms.  It says "most likely", and is then badly worded to say "effective".  This is exactly how myths get perpetuated, by taking things out of context.  A quick search finds many who opine it is already allowed, which is factually incorrect.

I doubt a W-2 is the way many SSN's are compromised.  The onus is still on the employee to handle "their business", such as not losing their W-2 or SS card, and reviewing their SS and credit report on a regular basis.  Even if the SSA/IRS decide to change the W-2 requirements, truncation will not be required, and comes with pitfalls for the employer (and preparer), possibly expensive pitfalls.

[Medlin Software, Dennis]

Note:  I am extra sensitive to bad information.  I hear from employers and others who believe what they have heard, and complain our software does not comply.  I then have to be the nit picker who points out the actual rules, which often gets a reply of "so what, X says"...  An example is a state where a tax agency has made a request for certain information on a W-2 in box 20, using the word "please", not "required".  First problem is the item is not required to be in any particular box, the actual law is the item can appear in "any available" box (yes, that's right, could be in box 1 and still comply).  I consider some will believe it is required, and sometimes go along (assuming it is not prohibited) to prevent me from being having to educate all who question the issue.  In this case, that is not even an option because what they would "please" like in box 20 will not fit, unless in a 2 or 4 point font, making the request pointless (to make it easier for the employee and preparer to not miss something).

[BLACK BART]

4 hours ago, Medlin Software said:

From the IRS W-2 instructions:

Social security numbers. Do not truncate social
security numbers shown on Forms W-2, W-2AS, W-2GU,
and W-2VI. Social security numbers are required on
Forms W-2. See Taxpayer identification numbers, later.
See also Regulations section 301.6109-(4)(b)(2).
Filers of other forms, such as certain Forms 1099/1098,
may truncate the social security number (XXX-XX-4567)
to combat identity theft.

 

4 hours ago, Medlin Software said:

Your link article was dated in January 2016, and says the rules "may" be updated, not that they have or will be updated.  I am going with the current W-2 instructions since they are very clear, and since the truncate regulations defer to the specific rules for the specific document..

Emphasis added:

"The regulations (TD 9675) that allow truncated taxpayer identification numbers to be used on Forms 1099-MISC may be updated to include authorization for truncated identification numbers on Forms W-2, said Nancy Rose, senior counsel in the IRS's Office of Chief Counsel. "

4 hours ago, Medlin Software said:

https://www.irs.gov/government-entities/federal-state-local-governments/truncated-taxpayer-identification-numbers

• You may not truncate on any forms filed with the IRS (Copy A) or with state or local governments.
• You cannot truncate your own identification number.
• These rules do not apply to Form W-2.

emphasis added

 

3 hours ago, Medlin Software said:

Pondering the issue personally, meaning what would I do if there was an option to truncate?  I would not.  Why?  It is likely the one and only time each year the employee gets the opportunity to make sure the employer has the proper SSN.  Not all employers give the employee a chance to verify the SSN in their payroll system before Copy A is submitted.

 

3 hours ago, Medlin Software said:

Your link also does not say it will apply to W-2 forms.  It says "most likely", and is then badly worded to say "effective".  This is exactly how myths get perpetuated, by taking things out of context.  A quick search finds many who opine it is already allowed, which is factually incorrect.

I doubt a W-2 is the way many SSN's are compromised.  The onus is still on the employee to handle "their business", such as not losing their W-2 or SS card, and reviewing their SS and credit report on a regular basis.  Even if the SSA/IRS decide to change the W-2 requirements, truncation will not be required, and comes with pitfalls for the employer (and preparer), possibly expensive pitfalls.

2 hours ago, Medlin Software said:

2 hours ago, Medlin Software said:

 

Note:  I am extra sensitive to bad information. I hear from employers and others who believe what they have heard, and complain our software does not comply.  I then have to be the nit picker who points out the actual rules, which often gets a reply of "so what, X says"...  An example is a state where a tax agency has made a request for certain information on a W-2 in box 20, using the word "please", not "required".  First problem is the item is not required to be in any particular box, the actual law is the item can appear in "any available" box (yes, that's right, could be in box 1 and still comply).  I consider some will believe it is required, and sometimes go along (assuming it is not prohibited) to prevent me from being having to educate all who question the issue.  In this case, that is not even an option because what they would "please" like in box 20 will not fit, unless in a 2 or 4 point font, making the request pointless (to make it easier for the employee and preparer to not miss something)

I'll take that as a "No."  Thanx.

P.S. Sorry, but I couldn't resist.  And, as a fellow nit-picker surrounded by ingrates, you have my sympathy.

[Medlin Software, Dennis]

BB,

I almost dropped my snack when I got to the bottom of your message!  Thanks

Not my place to say yes or no.  I am but another minion who has to follow the rules set forth by others, to the best of my ability at each moment.  I had not seen any confirmation of truncation being allowed on a W2, so I went looking.  Still have not found confirmation, but that if it does come to be, it will likely be optional.  That made me think what my preference would be, which is not to truncate for the reasons already covered.  I also found the (to me) disturbing incorrect information being touted by those claiming to know.  The pondering on this issue is probably wasted time in this group, as most here are probably efiling, so the "W2" information from one of your clients could be carved on a coconut, and you could possibly be somewhat comfortable preparing the return.

I was just talking to someone who asked why we do not print, in black and white, a 1099 misc.  The reason is the IRS has no specs for doing so, since they clearly state their copy must be on a red drop out ink form.  Does that mean they will reject a black and white form?  Hardly.  As long as it scans, no human will ever give it thought.  But, I am not comfortable preparing one in black in white, no matter what "other programs" do.

P.S.  This is a publicly viewable and searchable forum... Some members are also my customer, and customers of all members have the ability to search and find our posts using any search engine.

[RitaB]

3 hours ago, Medlin Software said:

BB,

I almost dropped my snack when I got to the bottom of your message!  Thanks

...The pondering on this issue is probably wasted time in this group, as most here are probably efiling, so the "W2" information from one of your clients could be carved on a coconut, and you could possibly be somewhat comfortable preparing the return.

I would never drop my snack but the thought of Form Coconut struck me as the funniest thing I've heard in connection with information returns.  I know, the material is unending, but still...

[Jack from Ohio]

I will not be truncating anything.  I choose not to be the babysitter for all the clients who are careless with their information.