[Federal Register Volume 79, Number 135 (Tuesday, July 15, 2014)]
[Rules and Regulations]
[Pages 41127-41132]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16464]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 301

[TD 9675]
RIN 1545-BJ16


IRS Truncated Taxpayer Identification Numbers

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

-----------------------------------------------------------------------

SUMMARY: This document contains final regulations regarding an IRS 
truncated taxpayer identification number, or a TTIN. Where not 
prohibited by the Internal Revenue Code, applicable regulations, other 
guidance published in the Internal Revenue Bulletin, forms, or 
instructions, these regulations allow use of a TTIN in lieu of a 
taxpayer's social security number (SSN), IRS individual taxpayer 
identification number (ITIN), IRS adoption taxpayer identification 
number (ATIN), or employer identification number (EIN) on payee 
statements and certain other documents. The TTIN displays only the last 
four digits of a taxpayer identifying number; either asterisks (*) or 
Xs replace the first five digits of the identifying number. These 
regulations affect persons that furnish or receive payee statements and 
other documents that the Internal Revenue Code, regulations, or other 
published guidance requires to be furnished to another person to the 
extent that a TTIN may appear in lieu of the SSN, ITIN, ATIN, or EIN of 
the payee or document recipient.

DATES: Effective Date: These regulations are effective on July 15, 
2014.
    Applicability Date: For dates of applicability see Sec. Sec.  
1.6042-4(g), 1.6043-4(i), 1.6044-5(d), 1.6045-2(i), 1.6045-3(g), 
1.6045-4(s), 1.6045-5(h), 1.6049-6(e)(5), 1.6050A-1(e), 1.6050E-1(m), 
1.6050N-1(e), 1.6050P-1(h), 1.6050S-1(f), 1.6050S-3(g), and 301.6109-
4(c).

FOR FURTHER INFORMATION CONTACT: Jacqueline K. Queener, (202) 317-6844 
(not a toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    This document amends the Income Tax Regulations (26 CFR part 1) and 
the Procedure and Administration Regulations (26 CFR part 301) to 
authorize filers of information returns to truncate a payee's or other 
person's nine-digit identifying number on payee statements and certain 
other documents. The goal of these amendments is to reduce the risk of 
identity theft that may stem from the inclusion of a taxpayer's entire 
identifying number on a payee statement or other document.
    Concerned about the risks of identity theft, including its effect 
on tax administration, the IRS established a pilot program allowing 
filers of information returns who met certain requirements to truncate 
an individual payee's identifying number on paper payee statements 
(Forms 1098, 1099, and 5498) for calendar years 2009 and 2010. See 
Notice 2009-93, 2009-51 IRB 863. The IRS subsequently extended the 
pilot program for payee statements for calendar years 2011 and 2012, 
and modified the program by removing the

[[Page 41128]]

Form 1098-C from the list of eligible documents on which a TTIN can be 
used because it is an acknowledgement under section 170(f)(12) rather 
than a payee statement. See Notice 2011-38, 2011-20 IRB 784.
    On January 7, 2013, the Treasury Department and the IRS published a 
notice of proposed rulemaking (REG-148873-09) in the Federal Register, 
78 FR 913, establishing an IRS truncated taxpayer identification 
number, a TTIN, and setting forth guidelines for its use. The scope of 
the proposed regulations mirrored that of the pilot project as 
reflected in Notice 2011-38 with one exception made in conformance with 
comments received in response to the pilot program: The proposed 
regulations permitted use of a TTIN on electronic payee statements in 
addition to paper payee statements. A public hearing was scheduled for 
March 12, 2013. One request to testify at the public hearing was 
received but later withdrawn, and the public hearing was cancelled. 
Eleven written comments responding to the NPRM were received and are 
available for public inspection at http://www.regulations.gov or upon 
request. After consideration of all the comments, the proposed 
regulations are adopted as amended by this Treasury decision. The 
amendments are discussed in the next section.

Summary of Comments and Explanation of Revisions

    While comments received in response to the NPRM overwhelmingly 
supported the proposed regulations, one commenter recommended against 
finalizing the proposed regulations because he failed to see the 
benefit of a TTIN and believed issuance of a TTIN would use funds for a 
structure that already exists. As defined in Sec.  301.6109-4(a) of the 
proposed regulations, a TTIN is simply a method for partially masking 
taxpayer identifying numbers that already exist. Use of a TTIN does not 
require issuance of a new number and no funds will be expended for that 
purpose. The Treasury Department and the IRS believe that the 
truncation of TINs will reduce the risk of identity theft. Therefore, 
the final regulations do not adopt this recommendation.
    Almost all commenters recommended allowing use of a TTIN in place 
of an EIN. Some commenters stated that, due to technical constraints or 
incomplete data records, many filers could not segregate payees with 
EINs from payees with individual taxpayer identifying numbers (SSNs, 
ITINs, and ATINs) that could be truncated under the proposed 
regulations. Therefore, these filers were not able to use TTINs at all. 
Other commenters stated that small businesses and closely-held entities 
have the same privacy concerns that individuals have, and should be 
granted the same benefits in protecting their identifying information. 
In light of these comments, the Treasury Department and the IRS believe 
that allowing truncated EINs will encourage filers to use TTINs for all 
payees and will further reduce risk of identity theft. Accordingly, 
Sec.  301.6109-4 of the final regulations permits truncation of EINs.
    Most commenters recommended expanding the authorization to use a 
TTIN on more documents than just payee statements in the Forms 1098, 
1099, and 5498 series. Commenters specifically recommended that the IRS 
consider allowing a TTIN to be used on a grantor trust letter as 
required by Sec.  1.671-4(b); a widely held fixed investment trust 
(WHFIT) statement as required by Sec.  1.671-5(e); a copy of a Schedule 
K-1 issued to a partner, shareholder, or beneficiary under section 
6012(a)(4), 6031(a)-(b), 6034A, or 6037(b); any Form 1097 series 
return; a Form 2439 ``Notice to Shareholder of Undistributed Long-Term 
Capital Gains''; or any other payee statement.
    Under the proposed regulations, use of a TTIN was permitted only if 
affirmatively authorized by the IRS. Commenters expressed concern that 
allowing TTINs to be used only when authorized unduly limits the 
documents on which TTINs may be used, which in turn reduces the effect 
of using TTINs to help combat identity theft. Continued use of this 
approach would impose an administrative burden on IRS to keep updated 
the list of documents on which TTINs are permitted. The commenters 
suggested that allowing TTINs to be used unless prohibited would 
address these concerns. The Treasury Department and the IRS agree that 
TTINs should be permitted on most documents that the internal revenue 
laws require to be provided to payees and other persons. Accordingly, 
the final regulations permit use of a TTIN on any federal tax-related 
payee statement or other document required to be furnished to another 
person unless prohibited by the Internal Revenue Code, regulations, 
other guidance published in the Internal Revenue Bulletin, forms, or 
instructions.
    Under this modified approach, there is no need to amend every 
information reporting regulation to permit the use of a TTIN. However, 
it may be unclear whether language in certain regulations could be 
interpreted as requiring use of an unmasked SSN, ITIN, ATIN, or EIN, 
thereby prohibiting use of a TTIN. Accordingly, to avoid confusion, the 
final regulations retain the provisions in the proposed regulations 
that amend specific information reporting regulations that contained 
language that could be interpreted as specifically requiring use of an 
unmasked SSN, ITIN, ATIN, or EIN.
    One commenter recommended allowing use of TTINs on Form 3520, 
Annual Return To Report Transactions With Foreign Trusts and Receipts 
of Certain Foreign Gifts, and Form 3520A, Annual Information Return of 
Foreign Trust With a U.S. Owner (Under Section 6048(b)). Taxpayer 
identifying numbers on returns and statements filed with the IRS are 
necessary for the IRS to determine compliance with the tax laws and to 
validate the information provided. Therefore, the final regulations 
retain the rule in the proposed regulations that TTINs may not be used 
on a return filed with the IRS. Accordingly, because Forms 3520 and 
3520A are returns required to be filed with the IRS this recommendation 
is not adopted.
    Consistent with the approach adopted in the final regulations, the 
regulations were revised to list the circumstances where use of a TTIN 
is not permitted. Under Sec.  301.6109-4(b)(2), a TTIN may not be used 
(1) where prohibited by statute, regulation, other guidance published 
in the Internal Revenue Bulletin, form, or instructions; (2) where a 
statute, regulation, other guidance published in the Internal Revenue 
Bulletin, form, or instructions, specifically requires use of an SSN, 
ITIN, ATIN, or EIN; or (3) on any return or statement required to be 
filed with, or furnished to, the IRS. Further, a person may not 
truncate its own taxpayer identification number on any tax form, 
statement, or other document that person furnishes to another person. 
For example, an employer cannot use a TTIN in place of its EIN on a 
Form W-2, Wage and Tax Statement, that the employer furnishes to an 
employee; and a person may not use a TTIN in place of its TIN on a Form 
W-9, Request for Taxpayer Identification Number and Certification.
    An example was added to Sec.  301.6109-4 of the regulations to 
illustrate the operation of the revised rule. In addition, because use 
of a TTIN is not limited by type of form, the definitions set forth in 
Sec.  301.6109-4(b) of the proposed regulations are no longer necessary 
and have been deleted from the final regulations.
    Because a TTIN is a permissible method of displaying the taxpayer 
identifying number, use of a TTIN when permitted by Sec.  301.6109-4 of 
the final

[[Page 41129]]

regulations satisfies the requirement to include a taxpayer identifying 
number on a document or statement. To eliminate any potential 
confusion, Sec.  301.6109-4(b) of the final regulations is amended to 
state that use of a TTIN as permitted in these regulations will not 
result in application of any penalty (e.g., a penalty under section 
6722 for failure to timely furnish a correct statement) for failure to 
include a taxpayer identifying number on any payee statement or other 
document.
    Section 301.6109-4 of the final regulations is effective July 15, 
2014. The amendments to the specific information reporting regulations 
are generally effective for payee statements due after December 31, 
2014. As stated in the proposed TTIN regulations, taxpayers were 
allowed to rely on the rules in the proposed regulations prior to 
publication of these final regulations. Finally, modifications have 
been made to the effective date sections of some of these information 
reporting regulations to remove outdated references.

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) of 
the Code, the notice of proposed rulemaking that preceded these final 
regulations was submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its impact on small 
business, and no comments were received.

Drafting Information

    The principal author of the final regulations is Jacqueline 
Queener, 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.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR parts 1 and 301 are 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 paragraphs (b) and (g) 
to read as follows:


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. 2012-38, 2012-48 IRB 
575, also published as Publication 1179, ``General Rules and 
Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain 
Other Information Returns,'' or any successor guidance. An IRS 
truncated taxpayer identifying number (TTIN) may be used as the 
identifying number of the recipient. For provisions relating to the use 
of TTINs, see Sec.  301.6109-4 of this chapter (Procedure and 
Administration Regulations).
* * * * *
    (g) Effective/applicability date. This section is effective for 
payee statements due after December 31, 1995, without regard to 
extensions. The amendments to paragraph (b) are effective for payee 
statements due after December 31, 2014. For payee statements due before 
January 1, 2015, Sec.  1.6042-4(b) (as contained in 26 CFR part 1, 
revised April 2013) shall apply.

0
Par. 3. Section 1.6043-4 is amended by:
0
1. Adding two new sentences to the end of paragraph (b)(4).
0
2. Revising the heading and adding two new sentences to the end of 
paragraph (i).
    The revision and additions 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 of the 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).
* * * * *
    (i) Effective/applicability date.* * * The amendments to paragraph 
(b)(4) are effective for any Form 1099-CAP required to be furnished 
after December 31, 2014. For any Form 1099-CAP required to be furnished 
before January 1, 2015, Sec.  1.6043-4(b) (as contained in 26 CFR part 
1, revised April 2013) shall apply.

0
Par. 4. Section 1.6044-5 is amended by:
0
1. Adding two new sentences to the end of paragraph (b).
0
2. Revising paragraph (d).
    The addition and revision 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 of the 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).
* * * * *
    (d) Effective/applicability date. This section is effective for 
payee statements due after December 31, 1995, without regard to 
extensions. The amendments to paragraph (b) are effective for payee 
statements due after December 31, 2014. For payee statements due before 
January 1, 2015, Sec.  1.6044-5(b) (as contained in 26 CFR part 1, 
revised April 2013) shall apply.

0
Par. 5. Section 1.6045-2 is amended by:
0
1. Adding two new sentences to the end of paragraph (c).
0
2. Revising the heading and adding two new sentences after the first 
sentence of paragraph (i).
    The revision and additions 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

[[Page 41130]]

as the identifying number of the 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).
* * * * *
    (i) Effective/applicability date. * * * The amendments to paragraph 
(c) apply to payee statements due after December 31, 2014. For payee 
statements due before January 1, 2015, Sec.  1.6045-2(c) (as contained 
in 26 CFR part 1, revised April 2013) shall apply. * * *

0
Par. 6. Section 1.6045-3 is amended by:
0
1. Adding two new sentences to the end of paragraph (e)(1).
0
2. Revising the heading and adding two new sentences to the end of 
paragraph (g).
    The revision and additions 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 of the customer. For provisions 
relating to the use of TTINs, see Sec.  301.6109-4 of this chapter 
(Procedure and Administration Regulations).
* * * * *
    (g) Effective/applicability date. * * * The amendments to paragraph 
(e)(1) apply to payee statements due after December 31, 2014. For payee 
statements due before January 1, 2015, Sec.  1.6045-3(e)(1) (as 
contained in 26 CFR part 1, revised April 2013) shall apply.

0
Par. 7. Section 1.6045-4 is amended by:
0
1. Revising paragraph (m)(1).
0
2. Adding two new sentences to the end of paragraph (s).
    The revision and addition 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 of the 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.
* * * * *
    (s) * * * The amendments to paragraph (m)(1) apply to payee 
statements due after December 31, 2014. For payee statements due before 
January 1, 2015, Sec.  1.6045-4(m)(1) (as contained in 26 CFR part 1, 
revised April 2013) shall apply.

0
Par. 8. Section 1.6045-5 is amended by:
0
1. Adding two new sentences before the last sentence of paragraph 
(a)(3)(i).
0
2. Revising the heading and adding two new sentences to the end of 
paragraph (h).
    The revision and additions 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 of the 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). * * *
* * * * *
    (h) Effective/applicability date. * * * The amendments to paragraph 
(a)(3)(i) apply to payee statements due after December 31, 2014. For 
payee statements due before January 1, 2015, Sec.  1.6045-5(a)(3)(i) 
(as contained in 26 CFR part 1, revised April 2013) shall apply.

0
Par. 9. Section 1.6049-6 is amended by:
0
1. Adding paragraph (b)(3).
0
2. Adding a new sentence at the beginning of paragraph (e)(5).
    The additions 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 number for the person. For provisions relating to 
the use of TTINs, see Sec.  301.6109-4 of this chapter (Procedure and 
Administration Regulations).
* * * * *
    (e) * * *
    (5) Effective/applicability date. Paragraph (b)(3) applies to payee 
statements due after December 31, 2014. * * *

0
Par. 10. Section 1.6050A-1 is amended by:
0
1. Adding two new sentences to the end of paragraph (c)(1).
0
2. Adding paragraph (e).
    The additions 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).
* * * * *

[[Page 41131]]

    (e) Effective/applicability date. The rules in this section apply 
to information returns and payee statements due after December 31, 
2014. For rules applicable for information returns and payee statements 
due before January 1, 2015, Sec.  1.6050A-1(c)(1) (as contained in 26 
CFR part 1, revised April 2013) shall apply.

0
Par. 11. Section 1.6050E-1 is amended by:
0
1. Adding two new sentences to the end of paragraph (k)(1).
0
2. Revising the heading and adding two new sentences to the end of 
paragraph (m).
    The revision and additions 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 of 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).
* * * * *
    (m) Effective/applicability date.* * * The amendments to paragraph 
(k)(1) apply to payee statements due after December 31, 2014. For payee 
statements due before January 1, 2015, Sec.  1.6050E-5(k)(1) (as 
contained in 26 CFR part 1, revised April 2013) shall apply.

0
Par. 12. Section 1.6050N-1 is amended by:
0
1. Adding two new sentences to the end of paragraph (b).
0
2. Revising paragraph (e).
    The addition and revision 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 of the recipient. For provisions 
relating to the use of TTINs, see Sec.  301.6109-4 of this chapter 
(Procedure and Administration Regulations).
* * * * *
    (e) Effective/applicability date. This section applies to payee 
statements due after December 31, 2014, without regard to extensions. 
For payee statements due before January 1, 2015, Sec.  1.6050N-1 (as 
contained in 26 CFR part 1, revised April 2013) shall apply.

0
Par. 13. Section 1.6050P-1 is amended by:
0
1. Removing ``section;'' from paragraph (f)(1)(i) and adding 
``section.'' in its place.
0
2. Adding two new sentences to the end of paragraph (f)(1)(i).
0
3. Revising paragraph (h).
    The addition and revisions 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 the person 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);
* * * * *
    (h) Effective/applicability date. This section applies to 
discharges of indebtedness after December 31, 2013. For discharges of 
indebtedness before January 1, 2014, Sec.  1.6050P-1 (as contained in 
26 CFR part 1, revised April 2013) shall apply.

0
Par. 14. Section 1.6050S-1 is amended by:
0
1. Removing ``section;'' from paragraph (c)(1)(i) and adding 
``section.'' in its place.
0
2. Adding two new sentences to the end of paragraph (c)(1)(i).
0
3. Revising the heading and adding two new sentences to the end of 
paragraph (f).
    The revision and additions 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 of 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);
* * * * *
    (f) Effective/applicability date.* * * Paragraph (c)(1)(i) applies 
to payee statements due after December 31, 2014. For payee statements 
due before January 1, 2015, Sec.  1.6050S-1 (as contained in 26 CFR 
part 1, revised April 2013) shall apply.

0
Par. 15. Section 1.6050S-3 is amended by:
0
1. Removing ``section;'' from paragraph (d)(1)(i) and adding 
``section.'' in its place.
0
2. Adding two new sentences to the end of paragraph (d)(1)(i).
0
3. Revising paragraph (g).
    The addition and revisions 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 of the 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).
* * * * *
    (g) Effective/applicability date. The rules of this section apply 
to information returns required to be filed, and payee statements 
required to be furnished after December 31, 2014. For information 
returns required to be filed, and payee statements required to be 
furnished before January 1, 2015, Sec.  1.6050S-3 (as contained in 26 
CFR part 1, revised April 2013) shall apply.

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-- Definition. An IRS truncated taxpayer 
identification number (TTIN) is an individual's social security number 
(SSN), IRS individual taxpayer identification number (ITIN), IRS 
adoption taxpayer identification number (ATIN), or IRS employer 
identification number (EIN) in which the first five digits of the nine-
digit number are replaced with Xs or asterisks. The TTIN takes the same 
format of the identifying number it replaces, for example XXX-XX-1234 
when replacing an SSN, or XX-XXX1234 when replacing an EIN.

[[Page 41132]]

    (b) Use of a TTIN. (1) In general. Except as provided in paragraph 
(b)(2) of this section, a TTIN may be used to identify any person on 
any statement or other document that the internal revenue laws require 
to be furnished to another person. Use of a TTIN is permissive and not 
mandatory. Use of a TTIN as permitted by this section will not result 
in application of any penalty for failure to include a correct taxpayer 
identifying number on any payee statement or other document. For 
example, the section 6722 penalty for failure to timely furnish a 
correct statement would not apply solely because the payor used a TTIN 
as permitted by this section.
    (2) TTIN not permitted. Use of a TTIN is not permitted in the 
following circumstances:
    (i) A TTIN may not be used on a statement or other document if such 
use is prohibited by statute, regulation, other guidance published in 
the Internal Revenue Bulletin, form, or instructions.
    (ii) A TTIN may not be used on a statement or document if a 
statute, regulation, other guidance published in the Internal Revenue 
Bulletin, form, or instructions, specifically requires use of a SSN, 
ITIN, ATIN, or EIN. For example, a TTIN may not be used on a Form W-
8ECI or Form W-8IMY because the forms and/or form instructions 
specifically prescribe use of an SSN, EIN, or ITIN for the U.S. 
taxpayer identification number.
    (iii) A TTIN may not be used on any return, statement, or other 
document that is required to be filed with or furnished to the Internal 
Revenue Service.
    (iv) A person may not truncate its own taxpayer identifying number 
on any statement or other document that it furnishes to another person. 
For example, an employer may not truncate its EIN on a Form W-2, Wage 
and Tax Statement, that the employer furnishes to an employee; and a 
person may not truncate its TIN on a Form W-9, Request for Taxpayer 
Identification Number and Certification.
    (3) Example. The provisions of paragraph (a) are illustrated by the 
following example:

     Example. On April 5, year 1, Donor contributes a used car with 
a blue book value of $1100 to Charitable Organization. On April 20, 
year 1, Charitable Organization sends Donor copies B and C of the 
Form 1098-C as a contemporaneous written acknowledgement of the 
$1100 contribution as required by section 170(f)(12). In late-
February, year 2, Charitable Organization prepares and files copy A 
of Form 1098-C with the IRS, reporting Donor's donation of a 
qualified vehicle in year 1. The Charitable Organization may use a 
TTIN in lieu of Donor's complete SSN in the Donor's Identification 
Number box on copies B and C of the Form 1098-C because copies B and 
C of the Form 1098-C are documents required by the Internal Revenue 
Code and regulations to be furnished to another person, there are no 
applicable statutes, regulations, other published guidance, forms or 
instructions, that prohibit the use of a TTIN on those copies, and, 
there are no applicable statutes, regulations, other published 
guidance, forms, or instructions that specifically require use of an 
SSN or other identifying number on those copies. A TTIN cannot be 
used on copy A of the Form 1098-C, however, because copy A is 
required to be filed with the IRS.

    (c) Effective/applicability date. This section applies on and after 
July 15, 2014.

John Dalrymple,
Deputy Commissioner for Services and Enforcement.
    Approved: May 30, 2014.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2014-16464 Filed 7-14-14; 8:45 am]
BILLING CODE 4830-01-P