Final U.S Treasury regulations published July 2, 2019, adopt without change a proposal to allow employers to use truncated social security numbers (SSNs) on the employee copies of Forms W-2. The change is intended to help prevent identity theft by revealing only the last four digits of the employee’s SSN. For the regulations, go to https://www.federalregister.gov/documents/2019/07/03/2019-11500/use-of-truncated-taxpayer-identification-numbers-on-forms-w-2-wage-and-tax-statement-furnished-to.
Employers must continue to use the full SSN on Forms W-2 filed with the Social Security Administration.
The use of the truncated numbers is voluntary and goes into effect for W-2s issued after December 31, 2020, giving employers a considerable amount of time to make decisions and reprogram systems.
The change was set in motion by 2015 legislation that removed a statutory requirement that full SSNs be used.
Treasury said that most comments received on the proposed regulations were favorable. However, several commenters noted that states are not required to permit truncation and that confusion and administrative difficulties may arise if the state copy of Form W-2 must include a full SSN. Treasury concluded that the overall security benefits of permitting truncation on the employee copy of the federal W-2 override any problems with state rules, and noted that if employers have large numbers of employees in a particular state that does not permit truncation, they are not required to truncate the number on the federal W-2.
How This Impacts Mobility
Employers will need to consider whether to adopt these new rules and reprogram their payroll systems. In doing so, they will need to consider any issues related to state requirements for a full SSN on the state copy of the Form W-2 issued to employees.