An Individual Taxpayer Identification Number (ITIN) is a tax processing number, issued by the Internal Revenue Service, for certain resident and nonresident aliens, their spouses, and their dependents. It is a nine-digit number beginning with the number “9” and is formatted like an SSN (Social Security Number).
An ITIN is only available to individuals who are required to have a taxpayer identification number for tax purposes, but who do not have, and are not eligible to obtain, an SSN. You may be eligible for a Social Security Number if you are a US Citizen, a green card holder, or are an individual holding a work or student visa (lawful alien status).
The IRS will no longer process a tax return without a valid ITIN. Tax returns submitted without an ITIN are immediately returned to the taxpayer with a W-7 form. Processing of the return (and refunds for that matter) will be delayed until the return is submitted with a valid identification number or a correctly filled out W-7 form with supporting documentation.
Form W-7 must be completed, signed, and dated by the applicant. The form requests general information such as the applicant’s name, address, country of birth, citizenship, as well as the reason the form is being completed (ex. Nonresident alien filing a U.S. return, dependent of U.S. person, etc.). The IRS will not issue an ITIN without a valid tax reason. The completed W-7 application must be submitted to the IRS along with a valid U.S. Federal income tax return (or if eligible, specific documents for one of five exceptions to the tax return filing requirement).
Supporting documentation to substantiate the individual’s “identity” and “foreign status” must also be attached. The IRS has very specific requirements for what they will accept as identity documents and what they will accept as certified copies. More often than not, clients have completed Form W-7 only to have it returned to them by the IRS because of unacceptable, incomplete, or incorrectly certified documentation.
Section 203 of the PATH act of 2015 made modifications to the Internal Revenue Code which has resulted in significant changes to the ITIN program. A new provision effective January 1, 2017 will eliminate all Certifying Acceptance Agents outside of the United States. This is going to cause headaches for many individuals living outside the U.S. requiring an ITIN.
Currently as it stands, it appears the IRS will only accept “copies” of identity documents if they are certified by the issuing agent, an employee of the IRS (currently only located in the United States), or a designee of the Secretary at a United States Diplomatic mission or consular post. The IRS will not accept copies of documents that are certified by a notary or lawyer.
Once the W-7 application is completed with all the necessary supporting documentation, it is sent to the ITIN Operations Unit in Austin, Texas for processing. The IRS usually processes Form W-7 within 7 weeks of receipt, but it can take up to 12 weeks during the busy tax season.
ALERT: You may need to renew your ITIN: All ITINs that have been issued and are not used on a federal tax return at least once in the last three years will no longer be valid for use on a tax return as of January 1, 2017. Additionally, all ITINS issued before 2013 will begin expiring, starting with those with middle digits of 78 and 79 (Example: 9XX-78-XXXX). All expired ITIN’s must be renewed before being used on a U.S. tax return.
ALERT: New documentation requirements when applying for or renewing an ITIN for certain dependents: Effective October 1, 2016, only a passport with an entry date into the U.S. will be acceptable as a stand-alone identification document for dependents from countries other than Canada, Mexico or dependents of military members overseas. Affected applicants will now be required to submit either U.S. medical records for dependents under age 6 or U.S. school records for dependents under age 18, along with the passport. Dependents aged 18 and over can submit a rental or bank statement or a utility bill listing the applicant’s name and U.S. address, along with their passport.