Montana Tax Agency Will Not Accept Truncated SSNs on Forms W-2, 1099

The Montana Department of Revenue (DOR) announced that it will not accept truncated or masked employee social security numbers (SSNs) on any forms filed with it, including state copies (Copies 1 and 2) of Forms W-2 and Forms 1099. The state had responded to a survey conducted by the Federation of Tax Administrators that it would not accept truncated SSNs and that guidance was in development.

The DOR guidance provides:

• Payers may not truncate the payee’s SSN on any forms filed with the DOR, Internal Revenue Service (IRS), or Social Security Administration (SSA)
• Payers may not truncate their own identification number on any forms given to the payee or filed with the DOR, IRS, or SSA

This means that no SSN truncation is allowed by either the employer or the employee. If the forms with truncated information are incorrectly submitted to the DOR, it may ask for the forms to be resubmitted using the correct format.

Previously, the IRS finalized regulations to allow employers to voluntarily truncate employee SSNs on copies of Forms W-2 furnished to employees after December 31, 2020. In the case of a Form W-2, a truncated SSN is one in which the first five digits are replaced with Xs or asterisks (e.g., XXX-XX-1234 or ****-**-1234).

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Lia Coniglio, Esq., is Managing Editor of PayState Update and Manager of State Payroll Information Resources for the APA.