Alert your Payroll/Accounts Payable people: Expect the Feds to issue a revenue procedure later this summer allowing you to mask vital data on some of your records.
You’ll be able to mask all but the last four digits of Taxpayer Identification Numbers (TIN) on 1099s that go from payer to payee. In addition to a Social Security Number, the number on Forms 1099 could be an employer ID or individual taxpayer ID number (ITIN).
Employers that choose to mask the numbers on workers’ 1099s will still have to include the full nine-digit number on the copy filed with IRS.
When the change comes, TIN-masking would be optional for 2009 and beyond, Deborah Wolf, director, IRS Office of Privacy, Information Protection and Data Security told attendees of the American Payroll Association’s (APA) Capital Summit.
The idea’s not being widely embraced, however. Only 37% of respondents in a recent APA survey said they’d adopt the practice for 2009 forms. Another 37% said they would begin masking in Tax Year 2010.
Those on the other side of the coin – the 26% who don’t plan to adopt TIN-masking – fear there’ll be no other way for the payee to verify that the payer has the correct number.
What about W-2s?
Don’t count on seeing a similar option for Forms W-2 any time soon. TIN-masking on them would have to be authorized by Congress because the Internal Revenue Code is clear that all nine digits are required on the W-2, says Wolf.
Sixty-seven percent of APA survey respondents said they’d mask SSNs on the W-2s, with many others again citing fear of using incorrect numbers as the biggest drawback.
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