Truncating Taxpayer Identification Numbers - Enough?

In July, the IRS issued the final rules allowing most payee statements issued either in paper or electronically to use a truncated Social Security Number or Employer Identification Number. So, it would be XXX-XX-1234, or ***-**-1234.  The issuer's TIN can't be truncated and no truncation is allowed on the forms that go to the IRS - only to the payees. And, because of statutory wording, no truncated TIN on a Form W-2, something that about 85% of individual filers receive.

So, this is a good step among many in trying to reduce the ease of identity thieves obtaining your tax ID number.  But it is not enough. Consider the following:

• Unlike truncating on receipts for credit or debit card purchases, truncating tax IDs on payee statements is optional, not mandatory.
• Experts estimate that the easiest numbers of your SSN to figure out are the first 5, not the last 4.
• It does nothing about the trillions of documents of all sorts that exist that have people's SSNs on them. People save old W-2s and tax returns (even those more than four years old), employment papers, etc.  Often, these get tossed without removing the SSNs.

I've got more in a short article published in the AICPA Tax Insider this week - "TTINs and protecting taxpayer identities."  I've got a few suggestions for further protecting taxpayer IDs.

What more do you suggest? 

Also consider state laws - tax and non-tax. Many states have laws restricting use of secure information, such as Social Security numbers on documents.

What do you think?