Notice 2011-38_IRS Introduces Shortened TIN Option
What started out as a pilot program now appears to be a permanent change. The IRS permits filers to use an abbreviated version of the Tax Identification Number (TIN). This program was introduced to combat the increased risk of identity theft involving sensitive data such as TINs. Now instead of reporting the entire nine digit number, filers are allowed to show only the last four digits. However, the identifier must meet several requirements in order to qualify to use the last four digits rather than all nine. These qualifications are as follows:
1. The identifying number must be a Social Security Number, ID Number, adoption taxpayer ID number (ATIN), or an individual taxpayer identification number. A Federal ID (EIN) must show all nine digits.
2. The 5 digits that have been withdrawn must be replaced by “X”s or “*” preceding the truncated number. Ex: XXX-XX-1234 or ***-**-1234.
3. The shortened number will only appear on paper returns sent to the payee.
4. You may not use the shortened TIN on Form 1098-C, 3921 or 3922.
These guidelines only to apply to the paper copies being sent to 1099 recipients. Moreover, this practice is not mandatory by any means, so if you would like to continue your reporting procedure showing all nine digits there are no penalties in doing so.
If you are a TSC1099 user and would like to use the shortened TIN option, please contact your account rep at 312-527-4306 and they will be glad to assist.
This change came about after the IRS published Notice 2011-38 which can be viewed in detail at: http://www.irs.gov/pub/irs-drop/n-11-38.pdf