Part III - Administrative, Procedural,
Truncating Social Security Numbers
on Paper Payee Statements
SECTION 1. PURPOSE
This notice announces an extension
and modification of the pilot program announced in Notice 2009-93,
2009-51 I.R.B. 863, which authorized filers of certain information
returns to truncate an individual payee’s nine-digit identifying
number on specified paper payee statements furnished for calendar
years 2009 and 2010, if the filers met certain requirements. This
notice extends the pilot program as to paper payee statements furnished
for calendar years 2011 and 2012, in order to allow more time for
the IRS and taxpayers to evaluate the program. This notice also modifies
the requirements announced in Notice 2009-93 by excluding Form 1098-C,
Contributions of Motor Vehicles, Boats, and Airplanes, from the pilot
program as it is an “acknowledgement” required by section
170(f)(12), rather than a payee statement. Therefore it is not included
in the scope of this pilot program.
SECTION 2. BACKGROUND
An information return is a return,
statement, form, or other document that must be filed with the IRS
to report certain payments or distributions to a payee or amounts
received from a payee in a calendar year. See section 6724(d)(1);
Treas. Reg. § 301.6721-1(g)(1). A filer is any person required
to file an information return. See Treas. Reg. § 301.6721-1(g)(6).
A payee is any person who is required to receive a this notice are
also included. See Rev. Proc. 2009-49, 2009-51 I.R.B. 879. 2 Treas.
Reg. § 301.6721-1(g)(5). A filer generally must also furnish
a payee statement to each payee that contains the same information
as the information return for that payee. See section 6724(d)(2);
Treas. Reg. § 301.6722-1(d)(2). Generally, filers are required
to furnish payee statements to payees on or before January 31st of
the year following the calendar year for which the information return
is made. See, e.g., sections 6041(d) and 6042(c). Filers may be subject
to penalties for failure to file correct information returns or furnish
correct payee statements. See sections 6721 and 6722.
Regulations, forms, or instructions
to forms typically require that the payee statement include the identifying
number of the payee. The three types of identifying numbers applicable
to individuals are social security numbers, IRS individual taxpayer
identification numbers, and IRS adoption taxpayer identification numbers.
All three of these identifying numbers are nine-digit numbers taking
the form 000-00-0000. Treas. Reg. § 301.6109-1(a)(1)(i).
A person’s identifying
number is sensitive personal information. A risk exists that this
information could be misappropriated from a paper payee statement
and misused in various ways, such as to facilitate identity theft.
SECTION 3. SCOPE
This notice applies only to
paper payee statements in the Form 1098 series (excluding Form 1098-C,
Contributions of Motor Vehicles, Boats, and Airplanes), Form 1099
series, and Form 5498 series. Substitute and composite substitute
statements (within the meaning of Treas. Reg. § 301.6722-1(a)(1))
that meet the requirements of (excluding Form 1098-C, Contributions
of Motor Vehicles, Boats, and Airplanes), Form 3 This notice does
not apply to any information return filed with the IRS, any payee
statement furnished electronically, or any payee statement not specified
in this notice.
During this extended pilot program,
truncation will be permitted only for individual identifying numbers
on the paper payee statements specified in this section. Truncation
of payee employer identification numbers (EINs) or filer identifying
numbers is not permitted. Truncation of identifying numbers is not
permitted on information returns filed with the IRS or on any payee
statements furnished electronically.
SECTION 4. REQUIREMENTS
A filer must satisfy the requirements
set forth in this section to be authorized to truncate identifying
numbers for individuals on the paper payee statements for calendar
years 2011 and 2012. The IRS will treat a filer as having satisfied
any requirement in Treasury and IRS guidance, whether in a regulation,
form, or form instructions, to include a payee’s identifying
number on a paper payee statement if the following requirements are
.01 The identifying number is
a social security number, IRS individual taxpayer identification number,
or IRS adoption taxpayer identification number;
.02 The identifying number is
truncated by replacing the first five digits of the nine-digit number
with asterisks or Xs (for example, a social security number 123-45-
6789 would appear on the paper payee statement as ***-**-6789 or XXX-XX-6789);
.03 The truncated identifying
number appears on a paper payee statement (including substitute and
composite substitute statements) in the Form 1098 series Courier’s
Desk, Internal Revenue Service, 1111 Constitution Avenue, N.W., 4
1099 series, or Form 5498 series for calendar years 2011 and 2012.
Truncation of an identifying
number on a paper payee statement in the manner set forth in this
Section 4 is authorized notwithstanding calendar year 2011 form instructions
that state that the pilot program announced in Notice 2009-93 has
SECTION 5. EFFECTIVE DATE
This notice is effective upon
SECTION 6. REQUEST FOR COMMENTS
The IRS invites the public to
submit comments on this notice by July 29, 2011, and is particularly
interested in comments from payors that furnished paper payee statements
with truncated identifying numbers under the original pilot program
as well as comments from payees that received paper payee statements
with truncated identifying numbers for either calendar year 2009 or
2010. The IRS is interested in learning about issues encountered by
payors and payees alike. The IRS also welcomes comments on whether
payors should be allowed to truncate a payee’s EIN, whether
truncation should be permitted on additional types of payee statements,
and whether payors should be allowed to truncate a payee’s identifying
number on electronically furnished payee statements.
Comments should be submitted
to: Internal Revenue Service, CC:PA:LPD:PR (Notice 2011-38), Room
5203, P.O. Box 7604, Ben Franklin Station, N.W., Washington, D.C.
20044. Alternatively, comments may be hand delivered between the hours
of 8:00 a.m. and 4:00 p.m., Monday through Friday, to CC:PA:LPD:PR
(Notice 2011-38), 5 Washington, D.C. Comments may also be transmitted
electronically via the following e- mail address: Notice.Comments@irscounsel.treas.gov.
Please include “Notice 2011- 38” in the subject line of
any electronic communications. All comments will be available for
public inspection and copying.
SECTION 7. DRAFTING INFORMATION
The principal author of this
notice is Tammie A. Geier of the Office of the Associate Chief Counsel
(Procedure and Administration). For further information regarding
this notice, please contact Tammie A. Geier at (202) 622-4940 (not
a toll-free call).