Thursday, August 11, 2016

Updated ITIN Procedures

Foreign individuals who are ineligible to obtain a social security number but who require a U.S. taxpayer identification number can apply for a an Individual Taxpayer Identification Number (ITIN) using Form W-7. The process is cumbersome since it requires the provision of original identity documents.

Treasury recently released Notice 2016-48 which provides some changes to the procedures, arising principally from 2015 legislation. Highlights of the Notice include:

  • The basis methodology of the Form W-7 and the provision of original identity documents remains in place, principally through certified acceptance agents (CAAs)who have received certification from the IRS or through some IRS Taxpayer Assistance Centers.
  • Taxpayers should check https://www.irs.gov/uac/tac-locations-where-in-person-document-verification-is-provided to find IRS Taxpayer Assistance Centers that can perform these functions, and to make appointments.
  • Provides provisions for renewing ITINs that expire for lack of use on a federal tax return for three consecutive years.
  • An individual whose expired ITIN is used only on information returns filed and furnished by third parties, such as Forms 1099, need not renew the ITIN. ITINs may continue to be used for information return purposes regardless of whether they have expired for individual income tax return filing purposes. If the individual is later required to file a tax return, however, the individual's ITIN will have to be renewed at that time.
  • Some individuals may not be aware that their ITIN has expired or that they must renew an expired ITIN. The IRS will still accept their returns, but there may be a delay in processing and certain credits may not be allowed unless the ITIN is renewed. This could result in a reduced refund or additional penalties and interest. IRS will notify these filers about the need to file Form W-7 to renew their ITIN.

Notice 2016-48

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