ITIN Numbers: IRS Changes Policy
The IRS issues ITIN’s (Individual Tax Identification Numbers) to individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain a Social Security Number (SSN) from the Social Security Administration (SSA). ITIN’s are for federal tax reporting purposes only and not for any other purpose. An ITIN does not provide work authorization in the USA, and does not provide eligibility for social security benefits.
The key change is that, for the first time, new ITINs will expire after five years. The IRS speculates that this change will help ensure ITINs are being used for legitimate tax purposes. Taxpayers who still need an ITIN will be able to reapply at the end of the expiration period. This step will provide additional safeguards to the ITIN program to help ensure only people with legitimate tax purposes are using the numbers. In addition, the IRS will explore options, through engagement with interested groups, for deactivating or refreshing the information relating to previously issued ITINs.
As part of its review process, the IRS heard from stakeholders that it is difficult in some instances for individuals to be without documents such as passports for extended periods. As a result, the IRS determined that trusted outlets other than its centralized ITIN processing site need to be available to review original documentation. As part of this recognition, while original documents or copies certified by the issuing agency are still required for most applicants, there will be more options and flexibility for people applying for an ITIN. These options provide alternatives to mailing in passports and other original documents.
Certifying Acceptance Agents (CAAs) – an important intermediary in the ITIN application process – will be able to engage in the ITIN process by reviewing original documents or copies certified by the issuing agency, but will be subject to new safeguards. CAAs will be required to certify to the IRS that they have verified the authenticity of the documents supporting the ITIN application. For certain ITIN applicants, this provides an option where they will not need to mail original documents such as passports.
The new rules do not apply to spouses and dependents of U.S. military personnel who need ITINs or to nonresident aliens applying for ITINs for claiming tax treaty benefits.
With respect to dependent children, in order to adequately substantiate identity and foreign status and protect important child tax credits, ITIN applications submitted to IRS by a CAA will continue to be required to include original documentation. For children under six, one of the documents can include original medical records. For school-age children, the documentation can include original, current year school records such as a report card.
Note to DACA Recipients: DREAMers with deferred action are eligible to apply for a SSN and should transfer their existing credit history to that number. Additionally, DREAMers must also contact the IRS to rescind their existing ITIN as an individual cannot have an ITIN and Social Security number at the same time. Most undocumented Americans are not eligible for a SSN but are eligible for an Individual Tax Identification Number. With an ITIN, individuals can take advantage of certain financial opportunities, such as applying for credit cards and obtaining loans. Thus, many DREAMers with ITINs have extensive credit histories that they’ve built over the past few years. DREAMers with deferred action are eligible to apply for a SSN and should transfer their existing credit history to that number. Additionally, DREAMers must also contact the IRS to rescind their existing ITIN as an individual cannot an ITIN and Social Security number at the same time. For more, refer here
Social Security Information on ITIN and SS cards can be accessed here
Tags: federal tax reporting, IRS, ITIN expiration, ITIN numbers, social security number, SSA, taxpayer identification number, Work Authorization