New rules from the IRS: who needs to update ITIN now?

Фото: Depositphotos

ITIN is the 9-digit number issued by the IRS to taxpayers who are not eligible to receive an SSN. Each ITIN begins with a 9 digit and the fourth and fifth digit are within 50-65, 70-88, 90-92 and 94-99. In December, 2015 of the year Congress passed a new law, The Protecting Americans from Tax Hikes (PATH), on the basis of which 4 August 2016, the IRS published Notice 2016-48. This document establishes new rules for issuing and renewing ITIN.

The procedure for obtaining a number has not changed and remains the same.: The taxpayer fills out the W-7, Application for IRS Individual Taxpayer Identification Number form in accordance with its instructions and submits it with the tax return for which ITIN is needed. Together with the W-7 form, the taxpayer must submit original documents or certified copies of such documents. A certified copy is a copy of a document confirmed by the authority that issued it in the country where the document was issued. In many countries, it is the Ministry of Justice. That is, notarized copies and even apostilled copies are not accepted!

The package of documents may be:

• filed in person - and then the documents are immediately returned to the taxpayer. In this case, you must find the office of the IRS, which provides such services, and make an appointment;
• mailed to the IRS - ITIN Operation Unit in Austin, Texas;
• filed through the Certified Acceptance Agent, which will prepare, in addition to the W-7 form, and other necessary documents. In this case, regular copies of documents are submitted to the IRS. A list of Certified Acceptance Agents can be found at Online IRS.

In 2016, a number of changes were adopted to the ITIN renewal order. and its duration

Previously, ITIN was obtained only once and had no expiration date. 30 June 2014, the IRS announced that all ITINs that had not been used for 5 consecutive years would be deactivated. However, since the process was not started by the time the PATH Act was adopted, the IRS rule became invalid and the PATH Act entered into force. In accordance with this law, some ITIN numbers will be invalid until they pass the renewal procedure.

The law establishes the following: if ITIN was not used in the federal tax return for 3 consecutive years, then such an ITIN ceases to exist in December of the third year of non-use.

The same rule applies to dependents. For example, if a taxpayer received ITIN in 2015 for a tax return for 2014 a year and then does not file a tax return or is not listed as a dependent in another tax payer’s declaration for 2016, 2017 and 2018, then ITIN will expire in December 2018. This rule applies regardless of when ITIN was issued.

For ITINs issued prior to 2013, the following validity periods apply:

• ITINs issued prior to 2008 will be valid until 1 in January 2017.
• ITINs issued in 2008 will be valid until 1 in January 2018.
• ITINs issued in 2009 or 2010 will be valid until 1 in January 2019.
• ITINs issued in 2011 or 2012 will be valid until 1 in January 2020.

Фото: Depositphotos

How to resume ITIN

ITIN, which has not been used in tax returns for 3 consecutive years and has expired, may be renewed from October 1 on 2016. To do this, you must submit the form W-7 and all the necessary documents. In this case, there is no need to file a tax return, but in the W-7 form, check the renewal box. Further, the whole procedure is the same as for ITIN, but without filing a declaration.

Considering that the IRS understands that not all taxpayers remember when they got ITIN, for this case the IRS proposed an ITIN renewal schedule based on the fourth and fifth digits (average numbers) in ITIN.

So, ITIN with average numbers 78 and 79 cease to be valid 1 January 2017. That is, if ITIN contains these average numbers and was not used in 2013, 2014 and 2015 declarations for a year, it loses its effect on 1 January 2017 and requires the taxpayer to undergo an ITIN resumption procedure.

Owners of such ITINs should receive a letter from 5821 to their address specified in the last filed declaration. In this case, the owners of such ITINs must complete the W-7 form in accordance with the instructions, tick the renewal box and attach a copy of the 5821 letter to speed up the procedure. The IRS expects 60 days to process all applications and return documents. However, the taxpayer may also wait for the tax reporting season and file the W-7 form along with the tax return. The procedure for submitting the entire package of documents is the same as described at the beginning of this article for those who receive ITIN for the first time.

Once the W-7 form has been approved, ITIN will take effect again and can be used.

To simplify the procedure for renewing the IRS, if one of the taxpayer's family members has average numbers in their ITIN 78 and 79 and received a letter 5821, then the IRS will accept a single renewal application for such cases.

If the above isin Since the average numbers 78 and 79 have been used over the past 3 years, they are valid and do not require any additional actions!

For ITIN with other average numbers that were issued prior to 2013 of the year, the IRS will indicate the renewal schedule in separate messages.

Фото: Depositphotos

What can happen if itin will become invalid? In this case, the IRS will still accept declarations using such numbers, but their processing will be longer. The taxpayer may lose a number of credits, for example, The Child Tax Credit and The American Opportunity Tax Credit, until it renews its ITIN. In this case, the IRS will inform the taxpayer about the reasons for the delay in processing the declaration and inform you about the need to go through the ITIN resumption procedure.

Importantly, ITIN relies only on individuals who are not eligible for SSN. This means that even if ITIN lost its effect, but the taxpayer acquired the right to receive the SSN during this time, then such taxpayer should not renew ITIN, but must receive the SSN.

If ITIN was used exclusively for informational declarations, such as the 1099 form, then this ITIN does not need to be resumed. However, if such an ITIN will be used for a tax return, then it must be renewed.

This material does not constitute written tax advice or legal advice. Any information from this material is not created for use by the taxpayer in order to avoid any sanctions imposed on the taxpayer, and also can not be the basis for consultation by third parties. Please always consult a professional service before taking any action based on the information from this material. Keep in mind that information may be outdated at the time of reading, and we do not undertake to guarantee the updating of information. Copyright www.Solven.pro. Xnumx

Original article published on the site Solven.pro and reprinted with permission of the author.

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See also:

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