SSN Policy Manual

Policy Manual

Until December 1989,26 US. C. $6676 (1989), set forth the penalties for failing to supply the Internal Revenue Service with the identifying number. This section states that a $50.00 penalty will be imposed for failure of an employer to provide an identifying number on any document filed with the Internal Revenue Service unless it is shown that the failure is due to reasonable cause and not willful neglect. The regulation interpreting the statute provides: 26 CFR $301.6109-1 (c) a payer is required to request the identifying number of the payee. If after such a request has been made, the payee does not furnish the payer with his identifying number, the penalty will not be assessed against the payer. The Omnibus Budget Restoration Act of 1983 (Pub. Law 101-239, Title VII, Section 771l(b)(l)), repealed Section 6676 of the Internal Revenue Code effective for statements or documents filed after December 3 1, 1989. Since December 31, 1989, Code Section 6723 has governed the failure to comply with information reporting requirements. Section 6723 provides that a penalty of $50.00 shall be assessed for each failure to comply with a reporting requirement. However, 26 USC $6724, provides for a waiver of any penalties assessed under the code upon a showing of reasonable cause. Section 6724(a) provides: 26 USC §6724(a) No penalty shall be imposed under this part with respect to any failure if it is shown that such failure is due to reasonable cause and not willful neglect. Therefore, the Code and regulations mandate a payer only to request the identifying number of the employee or payee. If after such a request has been made, the payee does not furnish the payer with his identifying number, the penalty will not be assessed against the payer, upon the filing of an affidavit with the Internal Revenue Service stating that a request for the payee's identifying number was made. Banking As explained above, current federal regulations require financial institution and some other businesses to request social security numbers or taxpayer ID numbers from their customers. The law clearly does not require the customer to disclose or provide that information. Furthermore, the law waives penalties if the financial institution shows that absence of the number is due to reasonable cause and not willful neglect. As you review each provision of law where a financial institution is required to request a taxpayer ID number or social security number, we find that the law provides for customers who may not have or not wish to disclose such number.