WASHINGTON (CN) - To reduce identity theft, the Internal Revenue Service proposed rules allowing filers of certain information returns to shorten taxpayer identification numbers used on corresponding payee statements that identify statement recipients.
The proposed rules create a new taxpayer identifying number known as an IRS truncated taxpayer identification number, or a TTIN, to be used as an alternative to a social security number, IRS individual taxpayer identification number or IRS adoption taxpayer identification number, according to the action. The TTIN only displays the last four digits of the individual's identifying number and is shown in the format XXX-XX-1234 or ***-**-1234, the action said.
These proposed rules would affect filers providing statements to payees, such as those filed when payments are made to independent contractors, when distributions are made to plan participants, or when scholarship payments are made to students. Currently, such filers are required to identify recipients by a taxpayer identification number such as a social security number.
The proposed rule addresses identity theft concerns from the use of taxpayer identifying numbers on payee statements. "In particular, the risks of misappropriation and subsequent misuse of that number were reported to be greatest with respect to paper payee statements," the agency noted.
Comments are due before Feb. 21, and a public hearing is scheduled for March 12. Outlines of topics to be discussed at the hearing are due by Feb. 20.
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