Final regulations - Truncated TINs allowed on payee statements, other documents 

July 14:  The Treasury Department and IRS today released for publication in the Federal Register final regulations (T.D. 9675) concerning the use of a “truncated taxpayer identification number” (TTIN)—displaying only the last four digits of a taxpayer identifying number with either asterisks (*) or with Xs replacing the first five digits of the identifying number—in an effort to reduce the risk of identity theft when a taxpayer’s entire identification number is used on payee statements or other documents (generally including a Schedule K-1 issued to a partner, S corporation shareholder, or trust beneficiary).

The final regulations [PDF 102 KB] adopt rules that were proposed in 2013 with certain changes. In general, the final regulations provide that when not prohibited by the Code, regulations or IRS guidance, a TTIN can be used on payee statements and certain other documents in lieu of:

  • A taxpayer’s social security number (SSN)
  • IRS individual taxpayer identification number (ITIN)
  • IRS adoption taxpayer identification number (ATIN)
  • Employer identification number (EIN)

Final regulations

Under the 2013 proposed regulations, the use of a TTIN was permitted only if affirmatively authorized by the IRS. The preamble to today’s final regulations explains that a “modified approach” is being adopted—i.e., the use of a TTIN is allowed on any federal tax-related payee statement or other document required to be furnished to another person unless prohibited by the Code, regulations, other guidance published in the Internal Revenue Bulletin, forms, or instructions.

Accordingly, the IRS and Treasury announced there is no need to amend every information reporting regulation to permit the use of a TTIN.

However, it may be unclear whether language in certain regulations could be interpreted as requiring use of an “unmasked” SSN, ITIN, ATIN, or EIN---i.e., language that bars the use of a TTIN. Accordingly, the final regulations retain the provisions from the proposed regulations that amend certain information reporting regulations that contained language that could be interpreted as specifically requiring use of an unmasked SSN, ITIN, ATIN, or EIN.

The use of a TTIN, however, is not allowed on every document—e.g., tax returns and statements filed with the IRS—because taxpayer identifying numbers on returns and statements filed with the IRS are necessary for the IRS to determine compliance with the tax laws and validate the information provided.

The final regulations will be published in the Federal Register on Tuesday, July 15 and generally are effective for payee statements due after December 31, 2014.

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