IRS Makes Interim Changes to ITIN Process
September 6, 2012
For several years, the IRS has issued Individual Taxpayer Identification Numbers (ITINs) to foreign individuals (both resident and nonresident aliens) who need a U.S. taxpayer identification number for tax reporting purposes but are not eligible to obtain a Social Security number from the Social Security Administration. Individuals apply for an ITIN by filing Form W-7 with the IRS, either on their own or with the assistance of an "acceptance agent." An acceptance agent is an entity (such as a college or university) authorized by the IRS to assist individuals in obtaining an ITIN by reviewing the necessary documents and forwarding the completed forms to IRS on behalf of the individual. Many colleges and universities function as acceptance agents.
New requirements for 2012. As part of a comprehensive review of the processing regime, the IRS recently issued new procedures that will make it more difficult for individuals and acceptance agents to obtain ITINs. These new procedures became effective on June 22, the date of issuance, and will be applicable only through the end of 2012. The new procedures, however, will not apply to individuals who filed their Forms W-7 prior to the June 22 issuance date. Final rules are expected to be published later this year to take effect in 2013 and subsequent years.
Under the new interim guidelines, the IRS will only issue ITINs when the Form W-7 (submitted by the individual or the acceptance agent) includes either original documentation (such as passports and birth certificates) or certified copies of these documents from the issuing agency. Unless an exception applies, ITINs will not be issued based on applications supported only by notarized copies of documents.
Exceptions. Nonresident alien individuals applying for an ITIN in order to claim tax treaty benefits may continue to use the Form W-7 procedures in effect before June 22, which means IRS will issue an ITIN based on "notarized" rather than "certified" documents in those instances. In addition, in cases where a nonresident alien needs an ITIN for reasons other than filing a U.S. tax return, such as to avoid third-party withholding or to file an information return of some kind, the individual also may continue to use the former Form W-7 documentation standards, although the IRS says that it will closely examine these documents. IRS also notes that acceptance agents should continue to submit the Certificate of Accuracy with the applicant's documents, even though they are certified.
The IRS also has published FAQs related to the new procedures and more details about how existing Form W-7 applications will be handled under the new procedures.
Forecast. IRS officials developing new final rules for ITIN procedures have held conference calls with the regulated community, including NACUBO and some member institutions. During the calls, college and university representatives have made it clear that the new rules could create administrative hardships for visiting students and create a duplicate layer of requirements for institutions, which are already required to comply with Department of Homeland Security rules for verification and tracking of foreign students and scholars via the Student and Exchange Visitor Information System (SEVIS). In talks with the IRS, higher education representatives have pointed to the rigor of the SEVIS requirements in verifying and continually tracking foreign visitors on campus, and strongly urged IRS staff to consider them as a reference point prior to finalizing ITIN procedures.
Director, Tax Policy
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