Truncating of Social Security Numbers on W-2's Coming Soon, I hope

[Cathy]

I read a thread on this issue from October, 2016 while researching the truncating of Social Security numbers on W-2's as I thought I read somewhere where it was to begin in 2016.  What I did find was included in "The Consolidated Appropriations Act of 2016" that was signed into law on December 18, 2015.  I read a synopsis of the law and it authorizes the IRS to promulgate a regulation to permit employee SS #'s to be truncated on Forms W-2 (xxx-xx-1234).  The provision was effective immediately, however, the authors didn't feel IRS would have the regulation ready for the 2015 W-2's, however, probably for 2016.  Well, that didn't happen either and hopefully Congress will get behind them and see to it that it's done as it would have eliminated a story that went national from our little Louisiana town.  The local hospital's finance person received an e-mail from the Administrator asking to mail (US Mail) him a copy of all of the employee W-2's.  Sure nuf, he was a good employee (?) and did as asked, and sure nuf, it was a scam.  

Some of the returns prepared for employees are still being rejected to date even though contact was made by the proper local officials to explain what happened and were given each employee's SS# to have their accounts on alert, and in addition, all employees sent in Form 14039, Identity Theft Affidavit.

Truncating the Social Security numbers would put a big dent in the theft issue, so if IRS can make up the regulations for ERO's to truncate Social Security numbers, why should they be dragging their feet for the public?  More funds....that's it...they need their funds restored.  I have a couple of bridges for sale if anyone believes that last statement.

Take care,

Cathy

 

 

 

[Lee B]

I can appreciate the identity theft issues involved, but as a practical matter how would employees know whether

their SSN was correct, i.e. 2 transposed digits etc ?

[Cathy]

The copy sent to the Social Security System must have the entire number on their copy of the W-2.  The employees could verify with the employer that his/her number is correct on the SS copy of the W-2 by signing a verification form or what have you. The instructions for the 1099's and 1098's for 2016 are printed on the instructions as follows:

Truncating recipient’s taxpayer identification number on paper statements. Pursuant to Treasury Regulations 301.6109-4, all filers of this form may truncate a recipient’s taxpayer identification number (social security number (SSN), individual taxpayer identification number (ITIN), adoption taxpayer identification number (ATIN), or employer identification number (EIN)) on payee statements. Truncation is not allowed on any documents the filer files with the IRS. A payer's taxpayer identification number may not be truncated on any form. See part J in the 2017 General Instructions for Certain Information Returns.                             (This is talking about one of the 1099 series.)

Just wondering how in the world would any of crooks get any of the 200+ employees returns accepted inasfar as the dates of birth of the taxpayer and spouse (if any) were nowhere on the W-2's that were mailed out in error.  In fact, in all of my years of e-filing, I have never, ever had a date of birth error on the taxpayer and spouse. Seems like I remember reading a dob error on a taxpayer or spouse (not dependents) would not reject returns.  If not, willing to bet the majority of the identity theft issues would be moot.  What am I missing?  If my theory is correct, why in hell is it a requirement to list a dob for the taxpayers on the e-file info page.  We were originally told in our seminars that the signature info would help prevent fraud and identity theft...it never did...so something isn't right somewhere!

 

Ok...rant and vent over....carry on!

[Lion EA]

I have seen DOB rejects for dependents (colleagues when I worked for HRB) but not for taxpayer spouse.  I thought DOB is required for dependents always and for the taxpayer/spouse for things like eligibility for EIC w/o children, retirement distributions w/o early withdrawal penalties, etc.

I mask everything I'm allowed to so fewer papers are out there with SSNs.  But, the scams ask for W-2s &/or lists of employees with SSNs, etc., so anyone who would fall for the scam probably would include the lists requested.  Tell your business clients.  Tell everyone you meet.  Tell everyone at church Sunday morning.  Spread the word.  These scams keep morphing, but they'll never go away.

[Cathy]

Thanks for the confirmation Lion...I think I will use my wrong date of birth when I file my return this year just to see what happens.  Every time I go over the E-File Info page with my clients, I tell them that by using their pin numbers and dates of birth, it was told by IRS to practitioners that it would help with identity theft...NOT.

Well, if the dates of birth of the taxpayer and spouse are mostly ignored, no wonder it's a crooks dream to get one's social security number to file a fraudulent tax return....we'll see.

 

[Don in Upstate NY]

AFAIK,  taxpayer  date of birth is ONLY required when using the SELF-SELECTED PIN method of e-filing.  It is NOT required when using the Practitioner PIN method.  It is one of the "shared secrets" that identifies the taxpayer.  In the Practitioner PIN method, the ERO identifies the taxpayer.  Turbo-Tax and other DIY programs use the SELF-SELECT PIN method by definition, since there is no practitioner involved.

Part of the confusion is of course that the IRS does not use the same English language that the rest of us do.  Just because the taxpayer selects his own PIN does not make the process a SELF-SELECT PIN method, any more than a Qualified Child must be your child, a Qualified Relative must be a relative, or a Green Card was always green.

Also just because your tax software asks for some data does not mean that that data gets sent to the IRS. Not even all the numbers that you enter on a paper return make it into the IRS computers.