IRPAC Makes Recommendations on SSN Truncation and More

IRPAC Makes Recommendations on SSN Truncation and More

Internal Revenue Service

Information Reporting Program Advisory Committee

The IRS Information Reporting Program Advisory Committee has released its annual report, which contains its recommendations on such tax administration issues as Form W-9, “Request for Taxpayer Identification Number and Certification,” and the truncation of Social Security numbers on Form W2, section 6050S, and Form 1098-T reporting.

Related IRS news release, <a data-mce-href="1x83w" href="/lr/resolve//1x83w">IR-2017-179</a>.

The IRS Information Reporting Program Advisory Committee has released its annual report, which contains its recommendations on such tax administration issues as Form W-9, “Request for Taxpayer Identification Number and Certification,” and the truncation of Social Security numbers on Form W2, section 6050S, and Form 1098-T reporting.

The IRS Information Reporting Program Advisory Committee has released its annual report, which contains its recommendations on such tax administration issues as Form W-9, “Request for Taxpayer Identification Number and Certification,” and the truncation of Social Security numbers on Form W2, section 6050S, and Form 1098-T reporting. IRPAC called for the finalization of proposed regulations (<a href="/lr/resolve/source-document/1wcwc" title="Source document">REG-105004-16</a>) that would allow the truncation of SSNs on Forms W-2. While current Form W-2 instructions state that filers are not allowed to truncate SSNs, the Protecting Americans From Tax Hikes Act of 2015 granted the IRS the authority to allow truncated SSNs. The act confused many filers who believed that the law allowed the use of truncated SSNs, even though they still violate current Form W-2 instructions, according to the report. With more than 250 million Forms W-2 processed in a tax year, “every possible security measure should be taken to protect taxpayers’ personally identifiable information,” including the masking of SSNs, IRPAC said. IRPAC recommended enhancements to Forms W-9, such as expanding the use of third-party repositories, extending electronic signature provisions, and allowing a limited exception to form guidance regarding Foreign Account Tax Compliance Act reporting. IRPAC also recommended that the IRS and the financial industry discuss ways to improve the penalties, abatement request, and levies process, noting a recent increase in the number of rejected reasonable cause abatement requests and expedited levies and garnishment actions “that have placed an increased financial burden on the industry.” The report cited examples of the IRS changing a financial institution’s address without receiving an address change request. Such actions could expose sensitive taxpayer information, risking identity theft and other forms of fraud, IRPAC said. IRPAC recommended that the IRS establish procedures requiring receipt of a completed Form 8822-B, “Change of Address or Responsible Party — Business,” before any updates are made to a filer’s address. IRPAC made 28 recommendations on international withholding and reporting issues, including changes to qualified intermediary agreement rules, section 871(m) requirements, foreign taxpayer identification numbers, section 305(c) deemed dividends, withholding statements, and other topics. IRPAC also offered recommendations on emerging compliance issues and employer information reporting and burden reduction.

The IRS Information Reporting Program Advisory Committee has released its annual report, which contains its recommendations on such tax administration issues as Form W-9, “Request for Taxpayer Identification Number and Certification,” and the truncation of Social Security numbers on Form W2, section 6050S, and Form 1098-T reporting. IRPAC called for the finalization of proposed regulations (REG-105004-16) that would allow the truncation of SSNs on Forms W-2. While current Form W-2 instructions state that filers are not allowed to truncate SSNs, the Protecting Americans From Tax Hikes Act of 2015 granted the IRS the authority to allow truncated SSNs. The act confused many filers who believed that the law allowed the use of truncated SSNs, even though they still violate current Form W-2 instructions, according to the report. With more than 250 million Forms W-2 processed in a tax year, “every possible security measure should be taken to protect taxpayers’ personally identifiable information,” including the masking of SSNs, IRPAC said. IRPAC recommended enhancements to Forms W-9, such as expanding the use of third-party repositories, extending electronic signature provisions, and allowing a limited exception to form guidance regarding Foreign Account Tax Compliance Act reporting. IRPAC also recommended that the IRS and the financial industry discuss ways to improve the penalties, abatement request, and levies process, noting a recent increase in the number of rejected reasonable cause abatement requests and expedited levies and garnishment actions “that have placed an increased financial burden on the industry.” The report cited examples of the IRS changing a financial institution’s address without receiving an address change request. Such actions could expose sensitive taxpayer information, risking identity theft and other forms of fraud, IRPAC said. IRPAC recommended that the IRS establish procedures requiring receipt of a completed Form 8822-B, “Change of Address or Responsible Party — Business,” before any updates are made to a filer’s address. IRPAC made 28 recommendations on international withholding and reporting issues, including changes to qualified intermediary agreement rules, section 871(m) requirements, foreign taxpayer identification numbers, section 305(c) deemed dividends, withholding statements, and other topics. IRPAC also offered recommendations on emerging compliance issues and employer information reporting and burden reduction.  