ITIN Expiring in 2017? The IRS is Now Accepting ITIN Renewal Applications
ITIN Expiring in 2017? The IRS is Now Accepting Renewal ApplicationsIn a recent news release, the Internal Revenue Service (“IRS”) announced that it is now accepting renewal applications for those taxpayers whose Individual Taxpayer Identification Numbers (ITINs) that are expiring at the end of 2017. This is the second year of the ITIN renewal program and the IRS has implemented some changes to facilitate the process for taxpayers. For one, the renewal process is starting three months earlier than last year. To avoid the rush, the IRS recommends submitting renewal ITIN applications as soon as possible. Under the Protecting Americans from Tax Hikes (PATH) Act, ITINs that have not been used on a federal tax return at least once in the last three consecutive years will expire on December 31, 2017. ITINs with the middle digits “70”, “71”, “72” or “80” will also expire at the end of the 2017 year (Examples: 9NN-70-NNNN; NNN-71-NNNN; 9NN-72-NNNN; 9NN-80-NNNN). With identity theft on a rise, the IRS is requiring the ITIN renewal to protect taxpayers and their families against potential fraud, thus ensuring that tax returns and refunds are attributed to the correct individuals. In our experience, the IRS has been increasingly scrutinizing ITIN applications and has been stricter on the applicable policies for assigning ITINs. Filling out Form W-7 properly, especially, when ITIN application is subject to certain exceptions, saves time and ensures positive outcome. Taxpayers who expect to file a tax return for the 2017 tax year and whose ITINs are expiring must file a renewal application on Form W-7 with the IRS. ITINs with middle digits of 78 and 79 have already expired last year (unless renewed in due course), but the taxpayers with those ITIN numbers can renew their ITINs at any time. Similar to the last year’s ITIN renewal process, taxpayers should receive a notice in the mail (in the next month or two) advising them of the change to their tax return and a need to renew their ITIN. This notice (CP-48) includes steps to take to renew an ITIN.
Why it is Important to Renew?
Although 2017 tax returns filed with an expired ITIN will be processed (however, it is unclear whether such returns may be successfully filed electronically; it is possible that they would have to be paper filed), the IRS will disallow certain exemptions and/or credits. Importantly, any such exemptions and credits would be disallowed temporarily – until the affected taxpayers renew their ITINs. The IRS will issue a notice advising the affected taxpayers about disallowed exemptions/credits and about their need to renew ITINs. Once the ITIN is renewed and properly attributed to the taxpayer’s tax return, pertinent credits and exemptions will be granted. Note that it may take a while. Being pro-active and renewing as soon as possible would ensure prompt return processing.
The family renewal option continues to be available for individuals who are required to renew their ITIN. You can renew ITINs for the entire family at the same time if your ITIN has the following middle digits: 70, 71, 72 or 80. Those who have received a renewal letter can renew the families ITINs together even if a member’s middle digit is other than 70, 71, 72 or 80. Family members include the tax filer, spouse and any dependents claimed on the tax return.
Three Ways to Renew an ITIN:
To renew an ITIN, taxpayers need to fill out Form W-7, Application for IRS Individual Taxpayer Identification Number along with all supporting documentation. Please be sure to review the Instructions to Form W-7 to properly indicate your reason for submitting the form and to ensure that you provide the appropriate supporting documentation. Those who are submitting Form W-7 to renew an ITIN do not need to attach a federal tax return, but they must still note the reason for applying for an ITIN. Taxpayers should carefully review the instructions and all applicable exceptions for applying for an ITIN.
Generally, taxpayers can renew their ITINs in three ways:
- Send the application by mail: Include Form W-7, along with original identification documents or certified copies by the agency that issued them, to the IRS address listed on Form W-7. Again, be sure to review the instructions carefully as there are specific addresses to send the application based on your mailing method. You will receive your I.D and documents back within 60 days after the IRS has reviewed them. Maybe this is not the fastest way to obtain an ITIN.
- Work with a Certified Acceptance Agent (CAA), who has been authorized by the IRS: CAAs have the ability to review and certify all identification documents for primary and secondary taxpayers, and verify that an ITIN application is correct before submitting it to the IRS. CAAs can also certify documents and ID’s, specifically and only passports and birth certificates for dependents, saving taxpayers from mailing in their original documents. The CAA will return the documents immediately after reviewing them for authenticity.
Note that CAAs can also conduct a taxpayer’s interview online via video conference, while having the original identification documents in hand. At U.S. Tax IQ, we follow this process when taxpayers are located outside of the GTA area and still need CAA’s assistance.
- Booking an appointment at a Designated IRS Taxpayer Assistance Center: Taxpayers have the option of booking an appointment in advance at a designated IRS Taxpayer Assistance Center in the United States; this method also allows you to hold on to your original identification and documents.
Avoiding Errors and Delays during ITIN Processing
Generally, the IRS will be able to provide a status for an ITIN application after 7-11 weeks, depending on the time of the year in which you have submitted your application. If you do not receive any correspondence from the IRS after that time, it is recommended that you contact the IRS to determine the status of your application.
In its news release, the IRS shared several common errors that can cause delays for ITIN renewal applications. The most common errors occur due to missing information, improper documentation or insufficient documentation. Before filing with the IRS an ITIN renewal application, the IRS recommends taxpayers to carefully review the form and the instructions. The instructions to Form W-7 can be found on the IRS website. www.irs.gov
ITINs are used by those who are required under the U.S. tax law to file taxes, but are not eligible for a Social Security Number (“SSN”). This typically includes nonresident alien individuals, such as Canadians with U.S. connection or snowbirds.
ITIN holders with questions should review the ITIN information page on the IRS website to understand the guidelines. To help taxpayers, the IRS has published informational materials, including flyers and fact sheets, available on its website: www.irs.gov.