Finalized ITIN Rules

Earlier this year, the IRS announced interim rules for issuing ITINs (Individual Taxpayer Identification Numbers). This is the number used on tax return for people who can’t qualify for a Social Security numbers. For example, the spouse and children of a taxpayers who has a work only SSN. The temporary rules made it harder to get an ITIN by requiring that the original documentation or copies certified by the issuing agency be submitted with the application. Until then, the applicant could use notarized copies of the original documents.

This rule has been made permanent with IR-2012-98. However; understanding that being without the original documents while an application is being processed can be an issue, the IRS will be allowing Certified Acceptance Agents (CAA) to certify they have authenticated the documents so that papers such as passports don’t have to be mailed to the IRS. One exception to these rules concerns the documentation for dependent children. These documents will still have to accompany the application. CAAs will now have to be someone who is also covered by Circular 230 (EA, CPA, RTRP…) and they will be required to take formal forensic training to help identify legitimate documents. The IRS will also step up their oversight and compliance activities with CAAs.

Beside submitting ITIN applications directly to the IRS or using a CAA, the IRS is planning on using some Taxpayer Assistance Centers, the US Tax Attaches in several countries, and VITA and Low-Income Taxpayer Clinics which have CAAs to validate supporting documentation. The policy put into place last month for foreign students to be certified through the Student Exchange Visitors Program will continue.

The new program will go into effect January 1, 2013 to meet the high demand of the tax filing season. Documentation changes will not apply to spouses and dependents of US military personal and nonresident aliens who need an ITIN to claim tax treaty benefits.

The biggest change to the program will be that ITINs will now expire after 5 years. The Taxpayer will be able to renew their ITIN before it expires. The IRS is also looking at a way to keep the information on the ITIN holder updated or to deactivate the number as necessary. The IRS sees this program as an ongoing process and they invite taxpayers to submit comments and suggestion by e-mail to ITINprogramoffice@irs.gov.

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