Non-U.S. persons that need a taxpayer identification number must go through the onerous process of obtaining an international taxpayer identification number – commonly referred to as an ITIN. The process is onerous because it requires the production and surrender of original identity documents to the IRS, or personal appearances before authorized agents of the IRS, at authorized IRS offices, or at certain embassies and consulates.
Adding to the misery was the requirement that an ITIN expires after 5 years. But not anymore!
The IRS has adjusted its 5-year automatic ITINs expiration policy so that ITINs will remain in effect for as long as taxpayer continues to file tax returns. More particularly, an ITIN expire if no income tax return is filed for 5 consecutive years – therefore, it appears that as long as an income tax return is filed once every five years, the ITIN will not expire.
By basing nonexpiration on the filing of income tax returns, for taxpayers that need the number for reporting aside from an income tax return, and such taxpayer does not need to file an income tax return, the 5 year expiration looks like it will still apply.
Further, the IRS stated that it won't begin to deactivate ITINs until 2016, thus allowing anyone with valid ITIN to file valid return in 2015 (and thus avoid presumably avoid deactivation).
The IRS announcement notes that a benefit of the new rules is that it will allow it clear off from its system all of the unused ITINs that have been previously issued – it is estimated that only 25% of issued ITINs are still active.
Once an ITIN is inactivated, the taxpayer will need to repeat the W-7 process to get an active number, including the presentation of required identity documents.
IR 2014-76
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