SSN Masking on W-2/1099-MISC Forms

SSN Masking on W-2/1099-MISC Forms 2017-10-09T22:51:24+00:00

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Our built-in feature protects the sender and recipient this year by Masking the SSN/TIN on the recipient copies of W-2/1099-MISC Forms. The full story is below, but basically this adds an extra level of security for the recipient and can help protect the company issuing the forms from liability. If you are issuing forms this year take a look below

Each year, over 10 million Americans are made vulnerable to identity theft through the mail during tax season. As identity thieves become savvier and more people are working as independent contractors, personal identity theft is on the rise, with theft rates in 2013 reaching the second highest rate in 11 years. The Javelin Strategy & Research Identity Fraud Report counted 13.1 million people who had been impacted by identity fraud that same year.

A significant portion of these identity crimes are committed by stealing personal mail, and using the personal tax ID info contained in 1099-MISC and W-2 recipient forms to impersonate the victim. Because recipient forms are required to be mailed in envelopes marked “Official Tax Document Enclosed”, mailed recipient copies raise a huge flag to identity thieves. The “Official Tax Document Enclosed” text offers the perfect way for identity thieves to quickly steal their victims’ most vulnerable and important information. The envelopes might as well read “Identity Thieves: please steal me!”

Not only does mailing sensitive tax ID info leave employees and contractors open to risk, but it also places the individual or business reporting the wages open to liability, if SSN Masking is not used. If a contractor’s recipient 1099-MISC or W-2 copies are stolen from the mail, the person or business who sent them may be held liable for damages.

The good news is, there’s a simple step employers can take to protect themselves and their contractors.

The IRS offers those companies that choose to e-file their recipient forms an identity protection service called “SSN Masking”, also known as “SSN Truncation”.  At WageFiling, this extra level of security is a standard feature. What it does is replaces the first five numbers of the recipient’s social security number or tax ID number with “X”s when preparing the copy to be mailed. This allows recipient copies to be completely secure, eliminating sensitive personal data.

In addition to protecting recipients’ identities, SSN Masking also opens the door for employers to email recipient copies, rather than mailing them, eliminating the need for paper and stamps altogether. In order abide by official IRS regulations when emailing PDFs, employers must:

  • opt in to SSN Masking
  • password protect and encrypt the document
  • receive either approval to email the copy, or confirmation of receipt of the PDF.

This service makes it fast and simple to protect the identities of your contractors, and to protect your business from the liability of identity theft. It also allow you to send your recipient their copy as a secure pdf. All you need to do is obtain permission or confirmation of the document being emailed.

Note: effective July 15, 2014, SSN Masking, or Truncated Tax ID Numbers, may be applied to SSNs and EINs on both 1099-MISC and W-2 forms.