IRS announced changes to the Individual Taxpayer Identification Number (ITIN) program. First, ITINs that have not been used on a tax return at least once in the last three consecutive tax years and ITINs with middle digits 78 or 79 will expire at the end of this year. Second, new requirements for a dependent’s use of the passport as a stand-alone identification document, to prove foreign status and identity, will take effect Oct. 1, 2016.
The new law requires all ITINs not used on a federal income tax return at least once for tax years 2013, 2014 or 2015 will expire on December 31, 2016.
Additionally, all ITINs with middle digits 78 or 79 whether used on a tax return or not will expire at the end of 2016. The IRS will send Letter 5821 to taxpayers who have filed a tax return containing an ITIN with the middle digits 78 or 79 in the last three years. The letter will explain the steps to take to renew the ITIN if it will be included on a U.S. tax return to be filed in 2017.
What do you need to do to renew your ITIN?
To renew an expiring ITIN, you must submit a completed Form W-7, Application for IRS Individual Taxpayer Identification Number, and all required identification documents to the IRS. No tax return is required for a renewal application.
Taxpayers who will file a tax return in 2017 and whose ITIN will expire at the end of the calendar year can begin the renewal process starting October 1, 2016.
To make this renewal effort easier and reduce paperwork, the IRS will offer a family option for ITIN renewal. If any individual having ITIN middle digits of 78 or 79 receives a renewal letter from the IRS, they can choose to renew the ITINs of all of their family members at the same time rather than doing them separately. Family members include the tax filer, spouse and any dependents claimed on their tax return.
What other important things do you need to know about renewing your ITIN?
You are reminded to use the most current revision of the Form W-7 (Revision 9-2016) and to refer to the Form W-7 instructions for guidance.
There are three methods taxpayers can use to submit their W-7 application package. They can:
- Mail their Form W-7 and original identification documents or copies of documents certified by the agency that issued them to the IRS address listed on the form (identification documents will be returned within 60 days),
- Use one of the many IRS authorized Acceptance Agents or Certified Acceptance Agents around the country, or
- In advance, call and make an appointment at an IRS Taxpayer Assistance Center in lieu of mailing identification documents to the IRS.
What has changed with passport documentation requirements for children?
Beginning Oct. 1, 2016, the IRS will no longer accept passports that do not have a date of entry into the U.S. as a stand-alone identification document for dependents from a country other than Canada or Mexico or dependents of military members overseas. The dependent’s passport must have a date of entry stamp–otherwise additional documents to prove U.S. residency will be required, such as:
- U.S. medical records for dependents under 6
- U.S. school records for dependents under 18 and
- U.S. school records, rental statements, bank statements or utility bills listing the applicant’s name and U.S. address, if over 18.
Additional Information you need to be aware of.
If you do not renew your ITIN and file a U.S. tax return with your ITIN, there may be a delay in processing your tax return. The failure to renew could result in a reduced refund or additional penalties and interest if you owe tax. Taking action to renew will help avoid delays.
No action is necessary if you do not need to file a tax return. ITINs that are only used on information returns filed with the IRS by third parties do not need to be renewed. However, if you use the ITIN to file a U.S. tax return in the future (including for a dependent), the ITIN will need to be renewed before you file.
For more information, visit the ITIN information page on IRS.gov