[Federal Register Volume 78, Number 4 (Monday, January 7, 2013)]
[Proposed Rules]
[Pages 913-918]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-31745]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 301

[REG-148873-09]
RIN 1545-BJ16


IRS Truncated Taxpayer Identification Numbers

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

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SUMMARY: This document contains proposed regulations that create a new 
taxpayer identifying number known as an IRS truncated taxpayer 
identification number, a TTIN. As an alternative to using a social 
security number (SSN), IRS individual taxpayer identification number 
(ITIN), or IRS adoption taxpayer identification number (ATIN), the 
filer of certain information returns may use a TTIN on the 
corresponding payee statements to identify the individual being 
furnished a statement. The TTIN displays only the last four digits of 
an individual's identifying number and is shown in the format XXX-XX-
1234 or ***-**-1234. These proposed regulations affect filers of 
certain information returns who will be permitted to identify an 
individual payee by use of a TTIN on the payee statement furnished to 
the individual, and those individuals who receive payee statements 
containing a TTIN.

DATES: Written or electronic comments must be received by February 21, 
2013. Outlines of topics to be discussed at the public hearing 
scheduled for March 12, 2013 must be received by February 20, 2013.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-148873-09), Room 
5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-
148873-09), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC 20224 or sent electronically, via the 
Federal eRulemaking Portal at http://www.regulations.gov (IRS REG-
148873-09). The public hearing will be held in the Internal Revenue 
Service Auditorium, Internal Revenue Service, 1111 Constitution Avenue 
NW., Washington, DC 20224.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Tammie A. Geier, (202) 622-3620; concerning submissions of comments, 
the public hearing, and/or to be placed on the building access list to 
attend the public hearing, Oluwafunmilayo Taylor of the Publications 
and Regulations Branch at (202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background

    This document contains proposed amendments to the Income Tax 
Regulations (26 CFR Part 1) and the Procedure and Administration 
Regulations (26 CFR Part 301). These amendments implement the pilot 
program announced in Notice 2009-93 (2009-51 IRB 863), extended and 
modified in Notice 2011-38 (2011-20 IRB 785), which together 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 through 2012. See Sec.  
601.601(d)(2).
    The pilot program was implemented in response to concerns about the 
risk of identity theft stemming from the inclusion of a taxpayer 
identifying number on a payee statement. In particular, the risks of 
misappropriation and subsequent misuse of that number were reported to 
be greatest with respect to paper payee statements.

I. Information Reporting

    Information returns are returns, statements, forms, or other 
documents that must be filed with the IRS to report transactions (for 
example, payments, distributions, or transfers) with another person in 
a calendar year. Section 6724(d)(1); Treas. Reg. Sec.  301.6721-
1(g)(1). Persons required to file information returns with the IRS are

[[Page 914]]

filers. Treas. Reg. Sec.  301.6721-1(g)(6). Generally, filers must 
furnish a statement to the person on the other side of the 
transaction--the payee--containing the information shown on the 
information return filed with the IRS. See Treas. Reg. Sec.  301.6721-
1(g)(5) (defining ``payee'' for purposes of sections 6721 and 6722). 
The payee may be the recipient of a payment (as referred to on Copy B 
of Form 1099-MISC, ``Miscellaneous Income''), a plan participant 
receiving distributions (as referred to on Copy B of Form 1099-R, 
``Distributions from Pensions, Annuities, Retirement or Profit-Sharing 
Plans, IRAs, Insurance Contracts, Etc.''), a transferor selling or 
exchanging real estate (as referred to on Copy B of Form 1099-S, 
``Proceeds from Real Estate Transactions''), a payer/borrower making 
interest payments (as referred to on Copy B of Form 1098, ``Mortgage 
Interest Statement''), a debtor whose debt was discharged, canceled or 
forgiven (as referred to on Copy B of Form 1099-C, ``Cancellation of 
Debt''), or a student receiving scholarships, grants or qualified 
tuition (as referred to on Copy B of Form 1098-T, ``Tuition 
Statement''). The statement furnished to the payee is referred to as a 
payee statement. Section 6724(d)(2); Treas. Reg. Sec.  301.6722-
1(d)(2). In certain circumstances, persons required to file information 
returns may file substitute forms with the IRS and furnish substitute 
form statements to payees rather than use the official IRS forms. Rev. 
Proc. 2011-60. See Sec.  601.601(d)(2).

II. Taxpayer Identifying Numbers

    Section 6011(a) requires, in part, that every person required to 
make a return or statement shall include therein the information 
required by forms or regulations. Regulations, forms, or instructions 
to forms may require that the filer of an information return include 
the identifying number of the payee on the corresponding payee 
statement.
    Section 6109(a) authorizes the Secretary to prescribe regulations 
with respect to the inclusion in returns, statements, or other 
documents of an identifying number as may be prescribed for securing 
proper identification of a person. A taxpayer identifying number is 
also referred to as a TIN, which section 7701(a)(41) defines as the 
identifying number assigned to a person under section 6109.
    Section 6109(a)(3) generally provides that any person required to 
make a return, statement, or other document with respect to another 
person shall request from the other person, and shall include in the 
return, statement, or other document, the identifying number as may be 
prescribed for securing proper identification of the other person. 
Thus, for information reporting purposes, a filer of an information 
return must request a TIN from the payee and include the TIN on the 
information return.
    Flush language in section 6109(a) states that the identifying 
number of an individual (or the individual's estate) is the 
individual's social security account number. Section 6109(d) provides 
that, except as otherwise specified under regulations, the social 
security account number issued to an individual under the Social 
Security Act is the identifying number for individuals for purposes of 
the Code. Regulations provide that the principal types of taxpayer 
identifying numbers are SSNs, ITINs, ATINs, and employee identification 
number (EINs). Treas. Reg. Sec.  301.6109-1(a)(1)(i). SSNs, ITINs, and 
ATINs are used to identify individuals. Treas. Reg. Sec.  301.6109-
1(a)(1)(ii). An EIN is used to identify an individual or other person 
(whether or not an employer). Treas. Reg. Sec.  301.7701-12.

Summary of Comments

    Comments received in response to the Notices, and other feedback 
from the payor community, reflect that filers' participation in the 
pilot was positive. Some filers, however, noted a few limitations that 
prevented participation. Several commentators suggested expanding the 
pilot program by recommending that truncation be authorized on a 
greater number of payee statements, that truncation be permitted on 
electronically furnished payee statements, and that filers be permitted 
to truncate an individual payee's EIN in addition to the other types of 
taxpayer identifying numbers (SSNs, ITINs, and ATINs) included in the 
pilot program. A permanent voluntary program was encouraged, rather 
than a mandatory program. Other commentators suggested that taxpayers 
could be adversely affected by the truncation of their identifying 
numbers on payee statements due to the inability to identify errors in 
the first five masked digits. Also, some state tax authorities stated 
that the truncation of taxpayer identifying numbers on Federal payee 
statements that are attached to state income tax returns might hamper 
state income tax processing. Treasury and the IRS gave serious 
consideration to the state government concerns, but concluded that 
truncation is unlikely to hamper state income tax return processing 
significantly because the vast majority of payee statements attached to 
state returns are Forms W-2, which are not subject to the truncation 
program, and because payee information is available to the states 
through data sharing programs with the Federal government.
    All comments were considered in developing the regulations that, as 
proposed, create a permanent truncation program. The proposed 
regulations expand the scope of the pilot program so that filers are 
permitted to furnish payee statements by electronic means. With regard 
to including a greater number of payee statements, the pilot program 
and, therefore, the proposed regulations are limited in scope by 
statute. For example, section 6051(a)(2) requires that the written 
statement furnished to employees (Form W-2, ``Wage and Tax Statement'') 
show the name of the employee ``and his social security account 
number.'' Accordingly, these proposed regulations do not expand the 
number of payee statements included beyond those included in the pilot 
program.
    Some commentators reported that the inability to truncate a payee's 
EIN on a payee statement resulted in their inability to participate in 
the pilot program. As described in the comments, some filers could not 
differentiate the type of identifying number assigned to a payee and/or 
could not differentiate numbers belonging to individuals. As explained 
in the comments, the affected filers, because of software limitations, 
could either truncate all payee identifying numbers, including EINs 
(whether assigned to an individual or a corporation, for example), or 
none at all. The IRS believes the misuse of EINs is less frequently an 
element of identity theft. As these regulations are proposed in 
response to the risk of identity theft stemming from the inclusion of 
an individual's taxpayer identifying number on a payee statement, these 
proposed regulations do not permit truncation for numbers that may be 
assigned to taxpayers other than individuals. The IRS seeks further 
comments regarding the number of filers who are unable to differentiate 
EINs from payee identifying numbers belonging to individuals and the 
feasibility of making software changes to address this issue.
    Some commentators explained that their systems could not readily 
accommodate truncation (as exemplified above with respect to EINs) and 
that filers of information returns have varying volume and procedures. 
Accordingly, participation in the truncation program proposed by the 
regulations is voluntary.

[[Page 915]]

Explanation of Provisions

    These proposed regulations create and allow filers of certain 
information returns to use an IRS truncated taxpayer identification 
number, a TTIN, to identify individuals on the payee statements 
corresponding to those information returns. The proposed regulations 
provide that the TTIN may be used in lieu of a payee's SSN, ATIN, or 
ITIN, but use of a TTIN is not mandatory. A TTIN may be used only on a 
payee statement and may be used on payee statements furnished by paper 
or electronic means. A filer may not use a TTIN on an information 
return filed with the IRS. A filer may not truncate its own identifying 
number on information returns or payee statements. A filer may not 
truncate a payee's EIN under the proposed regulations.
    The payee statements on which TTINs may be included are the same 
statements included in the current pilot program in Notice 2011-38. The 
current pilot program includes all statements in the Forms 1099, 1098, 
and 5498 series, with the exception of Form 1098-C, Contributions of 
Motor Vehicles, Boats, and Airplanes, because that form is not a payee 
statement but an ``acknowledgement.'' Any subsequent changes to the 
list will appear in published guidance.
    These proposed regulations also amend certain existing regulations 
under sections 6042, 6043, 6044, 6045, 6049, 6050A, 6050E, 6050N, 
6050P, and 6050S to specifically authorize the use of TTINs on payee 
statements furnished under those sections. Those regulations set forth 
requirements for payee statements that could be read as inconsistent 
with the use of TTINs to identify payees, in some cases requiring that 
the payee be furnished a copy of the information return filed with the 
IRS. Other information reporting regulations that do not contain 
provisions contradictory to the use of TTINs are not being updated in 
these proposed regulations.
    Many of the regulations governing the furnishing of payee 
statements do not provide for the use of substitute statements. These 
regulations are not being revised to address substitute statements at 
this time. For information regarding substitute statements, see Rev. 
Proc. 2011-60 (2011-52 IRB 934) (or its successor), republished as 
Publication 1179, ``General Rules and Specifications for Substitute 
Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns.'' 
Rev. Proc. 2011-60 also contains rules for electronic delivery of payee 
statements. Provisions relating to the use of TTINs in electronically 
furnished payee statements, if any, will be included in successor 
revenue procedures to Rev. Proc. 2011-60. See Sec.  601.601(d)(2).

Proposed Effective and Applicability Dates

    These regulations are proposed to take effect when published in the 
Federal Register as final regulations. The rules in these proposed 
regulations may be relied upon by the affected filers before the 
publication of the Treasury decision.

Effect on Other Documents

    The following publication will be obsolete as of the date this 
notice of proposed rulemaking is published as final regulations in the 
Federal Register:
    Notice 2011-38, 2011-20 IRB 785.

Special Analyses

    It has been determined that these regulations are not a significant 
regulatory action as defined in Executive Order 12866, as supplemented 
by Executive Order 13563. Therefore, a regulatory assessment is not 
required. It also has been determined that section 553(b) of the 
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to 
these regulations and, because the regulations do not impose a 
collection of information on small entities, the Regulatory Flexibility 
Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f), 
these regulations have been submitted to the Chief Counsel for Advocacy 
of the Small Business Administration for comment on their impact on 
small business.

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (a signed original and eight 
(8) copies) or electronic comments that are submitted timely to the 
IRS. The Treasury Department and the IRS request comments on all 
aspects of the proposed regulations. The Treasury Department and the 
IRS specifically request comments on issues encountered by filers and 
payees alike, whether filers should be permitted to truncate a payee's 
EIN and, if so, why and whether truncation should be permitted on 
additional types of payee statements. The Treasury Department and the 
IRS further request that filers provide details as to whether the 
exclusion of EINs from these regulations prevents them from using TTINs 
at all. All comments submitted by the public will be made available for 
public inspection and copying.
    A public hearing has been scheduled for February 21, 2013 beginning 
at 10:00 a.m., in the Internal Revenue Service Auditorium, Internal 
Revenue Service, 1111 Constitution Avenue NW., Washington, DC 20224. 
Due to building security procedures, visitors must enter through the 
Constitution Avenue entrance. In addition, all visitors must present 
photo identification to enter the building. Because of access 
restrictions, visitors will not be admitted beyond the immediate 
entrance area more than 30 minutes before the hearing starts. For 
information about having your name placed on the building access list 
to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section 
of this preamble.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who 
wish to present oral comments at the hearing must submit written or 
electronic comments by February 21, 2013 and an outline of the topics 
to be discussed and the time to be devoted to each topic (a signed 
original and eight (8) copies) by February 20, 2013. A period of ten 
minutes will be allotted to each person for making comments. An agenda 
showing the scheduling of speakers will be prepared after the deadline 
for receiving outlines has passed. Copies of the agenda will be 
available free of charge at the hearing.

Drafting Information

    The principal author of these regulations is Tammie A. Geier of the 
Office of the Associate Chief Counsel (Procedure and Administration).

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR parts 1 and 301 are proposed to be amended as 
follows:

PART 1--INCOME TAXES

0
Paragraph 1. The general authority citation for part 1 continues to 
read as follows:

    Authority: 26 U.S.C. 7805 * * *

0
Par. 2. Section 1.6042-4 is amended by revising paragraph (b) to read 
as follows:

[[Page 916]]

Sec.  1.6042-4  Statements to recipients of dividend payments.

* * * * *
    (b) Form and content of the statement. The statement required by 
paragraph (a) of this section must be either the official Form 1099 
prescribed by the Internal Revenue Service for the respective calendar 
year or an acceptable substitute statement that contains provisions 
that are substantially similar to those of the official Form 1099 for 
the respective calendar year. For further guidance on how to prepare an 
acceptable substitute statement, see Rev. Proc. 2011-60 (or its 
successor) republished as Publication 1179, ``General Rules and 
Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain 
Other Information Returns.'' See Sec.  601.601(d)(2) of this chapter. 
An IRS truncated taxpayer identifying number (TTIN) may be used as the 
identifying number for an individual recipient. For provisions relating 
to the use of TTINs, see Sec.  301.6109-4 of this chapter (Procedure 
and Administration Regulations).
* * * * *
0
Par. 3. Section 1.6043-4 is amended by adding two new sentences to the 
end of paragraph (b)(4) to read as follows:


Sec.  1.6043-4  Information returns relating to certain acquisitions of 
control and changes in capital structure.

* * * * *
    (b) * * *
    (4) * * * An IRS truncated taxpayer identifying number (TTIN) may 
be used as the identifying number for an individual shareholder in lieu 
of the identifying number appearing on the Form 1099-CAP filed with the 
Internal Revenue Service. For provisions relating to the use of TTINs, 
see Sec.  301.6109-4 of this chapter (Procedure and Administration 
Regulations).
* * * * *
0
Par. 4. Section 1.6044-5 is amended by adding two new sentences to the 
end of paragraph (b) to read as follows:


Sec.  1.6044-5  Statements to recipients of patronage dividends.

* * * * *
    (b) * * * An IRS truncated taxpayer identifying number (TTIN) may 
be used as the identifying number for an individual recipient in lieu 
of the identifying number appearing on the corresponding information 
return filed with the Internal Revenue Service. For provisions relating 
to the use of TTINs, see Sec.  301.6109-4 of this chapter (Procedure 
and Administration Regulations).
* * * * *
0
Par. 5. Section 1.6045-2 is amended by adding two new sentences to the 
end of paragraph (c) to read as follows:


Sec.  1.6045-2  Furnishing statement required with respect to certain 
substitute payments.

* * * * *
    (c) * * * An IRS truncated taxpayer identifying number (TTIN) may 
be used as the identifying number for an individual customer in lieu of 
the identifying number appearing on the information return filed with 
the Internal Revenue Service. For provisions relating to the use of 
TTINs, see Sec.  301.6109-4 of this chapter (Procedure and 
Administration Regulations).
* * * * *
0
Par. 6. Section 1.6045-3 is amended by adding two new sentences to the 
end of paragraph (e)(1) to read as follows:


Sec.  1.6045-3  Information reporting for an acquisition of control or 
a substantial change in capital structure.

* * * * *
    (e) * * *
    (1) * * * An IRS truncated taxpayer identifying number (TTIN) may 
be used as the identifying number for an individual customer. For 
provisions relating to the use of TTINs, see Sec.  301.6109-4 of this 
chapter (Procedure and Administration Regulations).
* * * * *
0
Par. 7. Section 1.6045-4 is amended by revising paragraph (m)(1) to 
read as follows:


Sec.  1.6045-4  Information reporting on real estate transactions with 
dates of closing on or after January 1,1991.

* * * * *
    (m) * * *
    (1)(i) Requirement of furnishing statements. A reporting person who 
is required to make a return of information under paragraph (a) of this 
section shall furnish to the transferor whose TIN is required to be 
shown on the return a written statement of the information required to 
be shown on such return. The written statement must bear either the 
legend shown on the recipient copy of Form 1099 or the following: This 
is important tax information and is being furnished to the Internal 
Revenue Service. If you are required to file a return, a negligence 
penalty or other sanction may be imposed on you if this item is 
required to be reported and the IRS determines that it has not been 
reported.
    (ii) This requirement may be satisfied by furnishing to the 
transferor a copy of a completed Form 1099 (or substitute Form 1099 
that complies with current revenue procedures). An IRS truncated 
taxpayer identifying number (TTIN) may be used as the identifying 
number for an individual transferor in lieu of the identifying number 
appearing on the information return filed with the Internal Revenue 
Service. For provisions relating to the use of TTINs, see Sec.  
301.6109-4 of this chapter (Procedure and Administration Regulations).
    (iii) In the case of a real estate transaction for which a Uniform 
Settlement Statement is used, this requirement also may be satisfied by 
furnishing to the transferor a copy of a completed statement that is 
modified to comply with the requirements of this paragraph (m), and by 
designating on the Uniform Settlement Statement the items of 
information (such as gross proceeds or allocated gross proceeds) 
required to be set forth on the Form 1099. For purposes of this 
paragraph (m), a statement shall be considered furnished to a 
transferor if it is given to the transferor in person, either at the 
closing or thereafter, or is mailed to the transferor at the 
transferor's last known address.
* * * * *
0
Par. 8. Section 1.6045-5 is amended by adding two sentences before the 
last sentence of paragraph (a)(3)(i) to read as follows:


Sec.  1.6045-5  Information reporting on payments to attorneys.

    (a) * * *
    (3) * * *
    (i) * * * An IRS truncated taxpayer identifying number (TTIN) may 
be used as the identifying number for an individual attorney in lieu of 
the identifying number appearing on the information return filed with 
the Internal Revenue Service. For provisions relating to the use of 
TTINs, see Sec.  301.6109-4 of this chapter (Procedure and 
Administration Regulations). * * *
* * * * *
0
Par. 9. Section 1.6049-6 is amended by adding paragraph (b)(3) to read 
as follows:


Sec.  1.6049-6  Statements to recipients of interest payments and 
holders of obligations for attributed original issue discount.

* * * * *
    (b) * * *
    (3) With respect to both statements to persons receiving payments 
of interest and persons holding obligations, the statement shall 
include the name, address, and taxpayer identifying number of such 
person. An IRS truncated taxpayer identifying number (TTIN) may be used 
as the identifying

[[Page 917]]

number for an individual person. For provisions relating to the use of 
TTINs, see Sec.  301.6109-4 of this chapter (Procedure and 
Administration Regulations).
* * * * *
0
Par. 10. Section 1.6050A-1 is amended by adding two sentences to the 
end of paragraph (c)(1) to read as follows:


Sec.  1.6050A-1  Reporting requirements of certain fishing boat 
operators.

* * * * *
    (c) * * *
    (1) * * * An IRS truncated taxpayer identifying number (TTIN) may 
be used as the identifying number for the individual in lieu of the 
identifying number appearing on the information return filed with the 
Internal Revenue Service. For provisions relating to the use of TTINs, 
see Sec.  301.6109-4 of this chapter (Procedure and Administration 
Regulations).
* * * * *
0
Par. 11. Section 1.6050E-1 is amended by adding two sentences to the 
end of paragraph (k)(1) to read as follows:


Sec.  1.6050E-1  Reporting of State and local income tax refunds.

* * * * *
    (k) * * *
    (1) * * * An IRS truncated taxpayer identifying number (TTIN) may 
be used as the identifying number for the individual in lieu of the 
identifying number appearing on the information return filed with the 
Internal Revenue Service. For provisions relating to the use of TTINs, 
see Sec.  301.6109-4 of this chapter (Procedure and Administration 
Regulations).
* * * * *
0
Par. 12. Section 1.6050N-1 is amended by adding two sentences to the 
end of paragraph (b) to read as follows:


Sec.  1.6050N-1  Statements to recipients of royalties paid after 
December 31, 1986.

* * * * *
    (b) * * * An IRS truncated taxpayer identifying number (TTIN) may 
be used as the identifying number for an individual recipient. For 
provisions relating to the use of TTINs, see Sec.  301.6109-4 of this 
chapter (Procedure and Administration Regulations).
* * * * *
0
Par. 13. Section 1.6050P-1 is amended by:
0
a. Removing ``section;'' from paragraph (f)(1)(i) and adding 
``section.'' in its place; and
0
b. Adding two sentences to the end of paragraph (f)(1)(i) to read as 
follows:


Sec.  1.6050P-1  Information reporting for discharges of indebtedness 
by certain entities.

* * * * *
    (f) * * *
    (1) * * *
    (i) * * * An IRS truncated taxpayer identifying number (TTIN) may 
be used as the TIN of an individual for whom there was an identifiable 
event in lieu of the identifying number appearing on the information 
return filed with the Internal Revenue Service. For provisions relating 
to the use of TTINs, see Sec.  301.6109-4 of this chapter (Procedure 
and Administration Regulations);
* * * * *
0
Par. 14. Section 1.6050S-1 is amended by:
0
a. Removing ``section;'' from paragraph (c)(1)(i) and adding 
``section.'' in its place; and
0
b. Adding two sentences to the end of paragraph (c)(1)(i) to read as 
follows:


Sec.  1.6050S-1  Information reporting for qualified tuition and 
related expenses.

* * * * *
    (c) * * *
    (1) * * *
    (i) * * * An IRS truncated taxpayer identifying number (TTIN) may 
be used as the TIN for the individual in lieu of the identifying number 
appearing on the information return filed with the Internal Revenue 
Service. For provisions relating to the use of TTINs, see Sec.  
301.6109-4 of this chapter (Procedure and Administration Regulations);
* * * * *
0
Par. 15. Section 1.6050S-3 is amended by:
0
a. Removing ``section;'' from paragraph (d)(1)(i) and adding 
``section.'' in its place; and
    b. Adding two sentences to the end of paragraph (d)(1)(i) to read 
as follows:


Sec.  1.6050S-3  Information reporting for payments of interest on 
qualified education loans.

* * * * *
    (d) * * *
    (1) * * *
    (i) * * * An IRS truncated taxpayer identifying number (TTIN) may 
be used as the TIN for the individual payor in lieu of the identifying 
number appearing on the information return filed with the Internal 
Revenue Service. For provisions relating to the use of TTINs, see Sec.  
301.6109-4 of this chapter (Procedure and Administration Regulations).
* * * * *

PART 301--PROCEDURE AND ADMINISTRATION

0
Par. 16. The authority citation for part 301 continues to read as 
follows:

    Authority: 26 U.S.C. 7805.

0
Par. 17. Section 301.6109-4 is added to read as follows:


Sec.  301.6109-4  IRS truncated taxpayer identification numbers.

    (a) In general--(1) Definition. An IRS truncated taxpayer 
identification number (TTIN) is an individual's social security number 
(SSN), IRS individual taxpayer identification number (ITIN), or IRS 
adoption taxpayer identification number (ATIN) that is truncated by 
replacing the first five digits of the nine-digit number with Xs or 
asterisks. The TTIN is shown in the format XXX-XX-1234 or ***-**-1234.
    (2) Use of a TTIN. (i) A TTIN may be used by a filer of certain 
information returns to identify an individual on the corresponding 
payee statement furnished to the individual, as authorized by 
regulations, forms or form instructions, or other guidance published by 
the Internal Revenue Service. A TTIN may not be used on payee 
statements corresponding to the Form W-2 series, the Form 1098-C 
(Contributions of Motor Vehicles, Boats, and Airplanes), or where 
identification of a taxpayer by an SSN, ITIN, or ATIN is mandated by 
statute.
    (ii) A TTIN cannot be used by a filer on any information return 
filed with the Internal Revenue Service.
    (iii) A TTIN may only be used for identifying individuals assigned 
SSNs, ITINs, or ATINs.
    (iv) A filer may not truncate its own taxpayer identifying number 
on any document.
    (v) Use of a TTIN is permissive and not mandatory.
    (b) Definitions--(1) Filer. A filer means a person who is required 
to report a transaction to the Internal Revenue Service on an 
information return.
    (2) Information return. An information return means the returns, 
statements, forms, or other documents that businesses must file with 
the Internal Revenue Service to report transactions with other persons.
    (3) Payee statement. A payee statement means the copy of the 
information set forth on an information return filed with the IRS that 
is furnished to the individual payee, recipient, participant, 
transferor, payer/borrower, debtor, or student, depending upon the 
specific reporting requirements.

[[Page 918]]

    (c) Effective/applicability date. This section applies after the 
date of publication of the Treasury decision adopting these rules as 
final regulations in the Federal Register. The rules in these proposed 
regulations may be relied upon by the affected filers prior to the 
publication of final regulations.

Steven T. Miller,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2012-31745 Filed 1-2-13; 4:15 pm]
BILLING CODE 4830-01-P