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To advice assure bodies from character theft, the Internal Revenue Service has issued a final aphorism that will acquiesce administering to abbreviate Social Aegis numbers (SSNs) or addition aborigine identification numbers (TINs) on Form W-2 allowance and tax statements that are broadcast to employees, alpha in 2021.
The IRS appear the new aphorism in the Federal Register on July 3. It finalizes a proposed aphorism issued in September 2017 with no absolute changes.
Under the regulation, SSNs or added TINs can be masked with the aboriginal bristles digits of the nine-digit cardinal replaced with asterisks or XXXs in the afterward formats:
“From a aegis standpoint, this will board a greater amount of aegis to employees,” said Mike Trabold, administrator of acquiescence at amount administering close Paychex.
To ensure that authentic allowance advice is appear to the IRS and the Social Aegis Administering (SSA), the aphorism does not admittance truncated TINs on W-2 forms beatific to those agencies. The IRS said that instructions to W-2 forms will be adapted to reflect these regulations and explained that appearance the numbers on employees’ forms is not mandatory.
The IRS already allows administering to use truncated TINs on employees’ Form 1095-C for Affordable Care Act advertisement and on assertive added tax-related statements broadcast to employees.
[SHRM members-only HR forms: W-2 Form Electronic Delivery Consent Notice]
Delayed Account Date
The IRS delayed the account date of the final aphorism to administer to W-2 forms that are appropriate to be furnished to advisers afterwards Dec. 31, 2020, “so administering still accept time to adjudge whether to apparatus the change,” according to attorneys at Washington, D.C., law close Covington & Burling. “The delayed able date is advised to acquiesce states and bounded governments time to amend their rules to admittance the use of truncated TINs, if they do not already do so,” the attorneys wrote.
“Employers charge adjudge if they’ll opt-in and accept SSNs truncated, as truncation is not mandatory,” Trabold said. “If so, administering will charge to adjudge if they’ll abbreviate for all their agent W-2s, or acquiesce advisers to accomplish that accommodation for their own W-2,” he added.
Employers should additionally affirm if their amount software or amount provider can board truncation, and actuate if the states and localities area they operate also accept truncation by 2020. “If not, an employer will charge to be accessible to abutment both truncated and non-truncated W-2 versions,” Trabold said.
“Permitting administering to abbreviate Social Aegis numbers on Forms W-2 provided to advisers will bigger assure individuals’ acute claimed information,” the Minnesota Department of Revenue said in comments submitted to the IRS afterwards the aphorism was proposed.
But addition commenter feared that the change could bassinet authentic advertisement to government agencies. “Employees who already accept masked pay statements will accept no agency of ensuring that their SSN is entered (and after appear to the SSA and IRS) correctly,” the bearding commenter said. “According to the SSA website, a SSN alteration is a accepted absurdity and alike if an SSN is ‘verified,’ it could still be entered into amount software incorrectly. The W2 provides a agency for the agent to bolt that mistake.”
Comments additionally warned that truncated TINs on W-2 forms could accomplish it difficult for tax acknowledgment preparers to verify that the aborigine has provided the actual SSN, amid added concerns.
The IRS responded that the allowances of acceptance administering to assure their advisers from character annexation by truncating employees’ SSNs (or addition TINs) outweighed the risks of adventitious consequences, and that abounding of the abeyant after-effects acclaimed by the commenters could be mitigated by application added methods to verify a taxpayer’s character and the accurateness of the taxpayers’ information.
Some accept the new aphorism does not go far abundant by authoritative truncated Social Aegis numbers or added TINs an advantage rather than a requirement. “W-2 forms accept been the ambition of several high-profile breaches, accordingly [the IRS] should alone admittance truncated SSNs to assure advisers from approaching breaches,” according to the Electronic Privacy Advice Center in Washington, D.C.
Related SHRM Articles:
IRS Issues Draft Form W-4 Overhaul for 2020, SHRM Online, June 2019
Former Agent Ghosted? Here’s What to Do with a Returned Check or W-2, SHRM Online, February 2019
Beware of Form W-2 Phishing Scheme, Authorities Warn, SHRM Online, January 2018
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