To comply with U.S. legal and regulatory obligations, ezyCollect must collect and verify the SSN (or, initially, the last four digits) of every U.S. resident individual on our platform. This requirement stems from three core obligations:
Anti-money-laundering (AML) and Know-Your-Customer (KYC) rules under the Bank Secrecy Act (BSA) and the USA PATRIOT Act mandate identity verification to prevent financial crime*.
Customer Due Diligence (CDD) requirements, which reinforce collecting unique identifiers (like SSNs) for beneficial owners of legal entities**.
Internal Revenue Service (IRS) tax-reporting rules (e.g. Forms 1099), which require a Taxpayer Identification Number on all reportable payments***.
Collecting the SSN (or last four digits) ensures proper reporting, fraud prevention, and alignment with evolving regulatory thresholds for payment volume.
*https://home.treasury.gov/news/press-releases/js335
**https://www.fincen.gov/resources/statutes-and-regulations/cdd-final-rule
***https://www.irs.gov/individuals/international-taxpayers/us-taxpayer-identification-number-requirement
1. Regulatory Background
1.1 KYC & AML under the USA PATRIOT Act
Section 326 of the USA PATRIOT Act requires financial institutions and payment platforms to establish “Customer Identification Programs” (CIP), which must include procedures to verify identity, maintain verification records, and screen against lists of known or suspected terrorists or criminals. (Citations)
1.2 Customer Due Diligence (CDD) Rule
Under FinCEN’s CDD Final Rule, ezyCollect must gather Beneficial Ownership Information—including SSNs—for legal entity customers. This promotes transparency over who truly owns or controls an account, preventing misuse for money laundering or terrorist financing. (Citations)
2. Tax Reporting Obligations
2.1 IRS TIN Requirement on 1099 Forms
The IRS mandates that payers include a valid Taxpayer Identification Number (TIN) on all 1099-series forms. For individuals, this is typically their SSN. As the withholding agent, ezyCollect requests and reports this number to comply with U.S. tax laws. (Citations)
2.2 Truncation and Confidentiality
While SSNs must be stored in full for IRS-filed documents (Copy A), payees’ copies (Copy B) may truncate the first five digits. ezyCollect still retains the full nine-digit SSN securely for filing and audit purposes. (Citations)
3. Onboarding Workflow
3.1 Collecting Last Four Digits Initially
For efficiency and user convenience, ezyCollect first attempts verification with only the last four digits of the SSN. If this fails, or if a connected account’s lifetime payments exceed USD 500,000, we request the full nine-digit SSN. (Citations)
3.2 Full-Nine-Digit Requirement at Volume Threshold
Once a connected account’s lifetime payment volume exceeds USD 500,000, ezyCollect automatically escalates to require all nine digits of the SSN, ensuring continued compliance as risk and exposure grow. (Citations)
4. Data Use, Privacy, and Security
Use of SSN: SSNs are used solely by ezyCollect for identity verification, regulatory compliance, and tax reporting.
Data Protection: We employ industry-standard AES-256 encryption at rest and in transit, role-based access controls, and regular audits to safeguard SSNs.
Limited Disclosure: ezyCollect does not share SSNs with unauthorized third parties; information is provided only to regulators or tax authorities as legally required.
5. Frequently Asked Questions
Q1: Why can’t I use an EIN instead of my SSN?
A1: Individuals must provide their SSN (or ITIN). Employer Identification Numbers (EINs) apply only to businesses and aren’t accepted for individual verification. (Citations)
Q2: What if I’m not a U.S. citizen?
A2: Non-U.S. persons not eligible for SSNs must provide an Individual Taxpayer Identification Number (ITIN), issued via IRS Form W–7. (Citations)
Q3: How is my SSN protected?
A3: ezyCollect uses AES-256 encryption, strict role-based access controls, and compliance with data-protection regulations (e.g. PCI DSS) to protect your SSN.
6. Relevant Documentation & Links
ezyCollect Verification FAQ (our support site)
Treasury PATRIOT Act Regulations (Section 326 final rule) (Citations)
FinCEN Customer Due Diligence Final Rule (Citations)
IRS SSN/TIN Reporting Requirement (Citations)
IRS Truncated TIN Guidance (Citations)
Connect Integration Guide (API reference for SSN collection) (Citations)