IRS-itin-updatedThe IRS announced today that Individual Taxpayer Identification Numbers (ITINS) will expire after five years if they are not used. In other words, if an ITIN is not used a federal income tax income tax return for five years in a row, then the ITIN will be deactivated and a taxpayer will have to reapply for one.

The IRS has stated though that they will not begin deactivating ITINS until 2016 but justified the move because only about 25% of 21 million ITINS issued since 1996 have been utilized on tax returns.  This policy is a change to the recent change that took effect at the start of 2013 that stated ITINS  issued after January 1st, 2013 would expire after five years regardless of whether they were used.

This new policy makes it easier on taxpayers that have an ITIN as they will not be required to request a new ITIN every five years if they are using it. This policy change is consistent with the IRS trying to make tax matters and procedures easier on taxpayers.

What Is an Individual Taxpayer Identification Number? 

An ITIN is needed by those taxpayers who cannot obtain a Social Security Number (SSN). It is needed if the taxpayer either wants to file a U.S tax return or if they are listed on a tax return as a spouse or dependent. ITINs play an essential role in the collection of taxes from nonresident aliens, resident aliens, and foreign nationals.

How Does One Request an ITIN? 

In order to obtain an ITIN, form W-7, Application for IRS Individual Taxpayer Identification Number must be filed with valid documentation that demonstrates foreign status and identity. In 2013, the IRS put in place new policies that state that original documentation (e.g. passports and birth certificates), or certified copies of these documents will be accepted. No longer will notarized copies be considered valid documentation. However, military spouses and dependents are exempt if they provide a copy of the spouse or parent’s military identification or apply for an overseas APO/FPO address. Nonresident aliens are also exempt if they are applying for an ITIN in order to claim tax treaty benefits.

Summary of ITIN Policy Updates

  • ITINs will expire after five years for taxpayers who not file a tax return for five years in a row
  • ITINS issued after January 1st, 2013 will not longer automatically expire after five years (unless again a taxpayer does not file consecutively for five years)
  • The IRS will not start deactivating ITINs until 2016
  • If a taxpayer has an ITIN deactivated, the taxpayer will need to reapply for an ITIN (following details listed above)