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IRS Finalizes Rules to Allow Employers to Mask SSNs on Employees’ W-2s

BY: APA Staff | 07/12/19

The IRS has finalized regulations to allow employers to voluntarily truncate employee social security numbers (SSNs) on copies of Forms W-2, Wage and Tax Statement, furnished to employees after December 31, 2020 [84 F.R. 31717, 7-3-19].

The regulations allow employers to voluntarily mask SSNs so they appear in the form of IRS truncated taxpayer identification numbers (TTINs), which display only the last four digits of a taxpayer identification number (TIN) and use X’s or asterisks for the first five digits (i.e., XXX-XX-1234 or ***-**-1234).

Truncation Allowed on Employee W-2 Copies Only

The final regulations permit employers to truncate employees’ SSNs to appear in the form of a TTIN on copies of Forms W-2 that are furnished to employees under IRC §6051 (copies B, C, and 2). It is important to note that truncation of SSNs on employee copies of Form W-2 will not be required. The decision is entirely up to the employer.

Truncation Not Allowed on W-2s Sent to SSA

The final regulations clarify that employers may not truncate an employee’s SSN to appear in the form of a TTIN on copy A of a Form W-2 filed with the Social Security Administration (SSA). Both the IRS and SSA need the full SSN on Forms W-2 to identify individuals. The IRS receives the full SSN when SSA sends the employer’s W-2 file to IRS once it has finished processing the file.

For more about the final regulations, see the July issue of Payroll Currently.

To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!