The IRS, in its continued efforts to safeguard confidential taxpayer information, has issued final regulations expanding the voluntary use of an IRS truncated taxpayer identification number (TTIN) to include Forms W-2. In 2014, the IRS issued guidance allowing the voluntary use of an TTIN, in lieu of a taxpayer’s social security number (SSN), employer identification number (EIN) or individual taxpayer identification number (ITIN), on payee statements and other documents – most commonly, Forms 1099.
The TTIN must only display the last four digits of a taxpayer’s identifying number – using either asterisks (*) or Xs to replace the first five digits. And, as with the regulations issued in 2014, employer participation is voluntary because employers are not required to use TTINs on Forms W-2 issued to employees.
This regulation affects Forms W-2 furnished to employees by employers who are (1) required to withhold and deduct employee taxes under section 6051 of the Code or (2) required to report group-term life insurance benefits provided to employees under section 6052. The regulations are effective as of July 3, 2019, and apply to Forms W-2 that are required to be provided to the employee after Dec. 31, 2020.
Forms W-2 that employers file directly with the IRS and SSA must continue to report the full taxpayer identification number.