IRS Reporting: Can nicknames be used as long as the SSN is correct?

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Question:

For IRS reporting purposes, are banks required to file using customer's formal names? If the customer's SSN is accurate, can the customer name be more casual, or even a nickname in some cases?

Answer:

You should strive to use the customer's legal name in all cases. The use of "nicknames" would not ordinarily cause problems with the IRS, however, since they key on last names for their name/number match program.

I'm not in favor of allowing nicknames on deposit account records, but see nothing particularly wrong with using them on checks. Of course, some people have been saddled with such unhappy monickers they legally adopt a less formal name.

First published on BankersOnline.com 8/12/02