Starting in 2021, employers may truncate taxpayer identification numbers (TINs) on form W-2s distributed to employees.
Beginning in 2021, to help protect people from identity theft, the Internal Revenue Service has issued a final rule that will allow employers to shorten Social Security numbers (SSNs) on Form W-2 wage and tax statements that are distributed to employees.
Under the regulation, SSNs can be masked with the first five digits of the nine-digit number replaced with asterisks or Xs in the following formats:
- ***-**-1234.
- XXX-XX-1234.
To ensure that accurate wage information is reported to the IRS and the Social Security Administration (SSA), the rule does not permit truncated TINs on W-2 forms sent to those agencies. The IRS stated that instructions for W-2 forms will be updated to reflect these regulations and explained that masking the numbers on employees’ forms is not mandatory.
The IRS noted that the benefits of allowing employers to protect their employees from identity theft by truncating employees’ SSNs (or alternatively TINs) outweighed the risks of unintended consequences, and that many of the potential consequences could be mitigated by using other methods to verify a taxpayer’s identity and the accuracy of the taxpayer’s information.
