IR-2012-98
IRS Strengthens Integrity of ITIN System; Revised Application Procedures in
Effect for Upcoming Filing Season
The Internal Revenue
Service announced today updated procedures to strengthen the Individual
Taxpayer Identification Number (ITIN) program requirements. The new
modifications and documentation standards further protect the integrity of the
ITIN application and refund processes while helping minimize burden for
applicants.
The changes build on previously
announced interim procedures. During the last several months, the IRS gathered
feedback from stakeholders and interested groups on how to best safeguard the
integrity of and improve procedures for this important tax identification
number.
ITINs play a critical role in the
tax administration process and assist with the collection of taxes from foreign
nationals, resident and nonresident aliens and others who have filing or
payment obligations under U.S. law. Designed specifically for tax
administration purposes, ITINs are only issued to people who are not eligible
to obtain a Social Security Number.
“Our review allowed us to evaluate
the program and gather feedback to make needed adjustments,” said IRS Acting
Commissioner Steven Miller. “We believe the final rules balance the need for
greater integrity for the ITIN and refund processes while minimizing the impact
on taxpayers.”
The IRS will maintain its new,
stronger standard for issuing ITINs. ITIN applications will continue to require
original documentation or copies certified by the issuing agency. In
addition, the IRS finalized its earlier decision to no longer accept notarized
copies of documents for ITINs. Most of the interim guidelines have been made
permanent. Those requirements that changed will provide additional flexibility
for people seeking ITINs while continuing the stronger protections.
A key change is that, for the first
time, new ITINs will expire after five years. 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.
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.
CAAs will now need to meet new
requirements and will face stronger due diligence standards to verify the
accuracy of supporting documentation. For the first time, only those covered
under Circular 230 are eligible to serve as a CAA. Exceptions are made for CAA
applicants from financial institutions, gaming facilities, Low-Income Taxpayer
Clinics and Volunteer Income Tax Assistance (VITA) Centers. CAAs will be
required to take formal forensic training to help them identify legitimate
identification documents. The IRS also plans greater oversight and compliance
activities with CAAs to safeguard the ITIN process.
In addition to direct submission of
documents to the IRS ITIN centralized site or use of CAAs, ITIN applicants will
have several other avenues for verification of their documents. These options
include some key IRS Taxpayer Assistance Centers (TACs), U.S. Tax Attachés in
London, Paris, Beijing and Frankfurt, and at the Low-Income Taxpayer Clinics
and Volunteer Income Tax Assistance (VITA) Centers that have CAAs. The
procedure announced Oct. 2, 2012 for foreign students at educational
institutions to be certified through the Student Exchange Visitors Program
(SEVP) remains.
The finalized procedures are
effective Jan. 1, 2013, in time for the 2013 tax-filing season when many ITIN
applications are submitted along with a taxpayer’s income tax return. Later in
January, participating IRS Taxpayer Assistance Centers will be available to
review and certify passports and national identification cards in person for
primary, secondary and dependent applicants. The first set of TACs that will
review and certify documents for ITINs are located in areas where past ITIN
activity has been prevalent. Additional details on participating IRS locations
and other rules will be available soon on IRS.gov.
As announced previously, some
categories of applicants are not impacted by these documentation changes, including:
- Spouses and dependents of U.S. military personnel who need ITINs.
- Nonresident aliens applying for ITINs for claiming tax treaty benefits.
The IRS also stressed that it will
continually monitor and work with interested stakeholders on the ITIN process
and intends to make appropriate adjustments to ensure the process works in a
fair, balanced fashion that meets the needs of taxpayers and tax
administration. Individuals or organizations that want to comment on these
procedures can do so by submitting an email to ITINProgramOffice@irs.gov.
More details on the permanent
procedures and other important information for ITIN applicants are available on
IRS.gov.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
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