IRS Pilot Program Will Allow Truncated Social Security Numbers on Information Returns


The IRS on Thursday announced a pilot program aimed at deterring identity theft (Notice 2009-93). Under the program, filers of certain paper information returns will be allowed to truncate the payee’s Social Security number on the payee statement. The change affects statements for 2009 and 2010.

 

Only paper payee statements for forms in the 1098, 1099 and 5498 series are eligible for the program. Filers must meet certain requirements, spelled out in the notice, but if they do, they will be treated as having met the various IRS and Treasury requirements that a payee’s Social Security or taxpayer identification number be included on the statement.

 

The filer must truncate the nine-digit number by replacing the first five digits with X or an asterisk. Thus, according to the notice, the sample Social Security number 123-45-6789 would be replaced either with ***-**-6789 or XXX-XX-6789.

 

The IRS has asked for comments on whether this change should be made mandatory, whether it should be expanded to other information returns, and whether it should be expanded to include electronically furnished statements. Comments are due May 1, 2010.

 

SPONSORED REPORT

Why cybercriminals are targeting CPAs

This free report expands on the most commonly found scams, why education and specialized IT knowledge help to lessen security vulnerabilities, and why every firm should plan carefully for how it would respond to a breach.

PODCAST

How tax reform — and Excel — are changing the CPA Exam

Mike Decker, the vice president of examinations at the AICPA, discusses changes being made to the exam as a result of tax reform — and about how Excel will now be available for use on the test.