Haven’t Used Your ITIN? Don’t Let It Expire if You Plan to File a Return in 2017

If you are a foreign individual with a U.S. income tax obligation, you may already have an Individual Taxpayer Identification Number (ITIN).  However, if you haven’t used your ITIN on a federal tax return in the past three years, it may be time to renew it.  Even if you have used your ITIN in the past three years, you may still have to renew it based on recently issued Notice 2016-48.

The Internal Revenue Service (IRS) recently announced provisions to help taxpayers comply with recent changes to the ITIN program made by the Protecting Americans from Tax Hikes (PATH) Act.  This Act indicated that any ITIN that has not been used on a federal tax return at least once in the last three years will no longer be valid – unless it is renewed.

Foreign individuals who have federal tax reporting or filing requirements are generally required to obtain an ITIN (if they do not qualify for a Social Security Number) to enable the IRS to process their tax returns. If a taxpayer hasn’t renewed and has an expired ITIN, he or she could face serious challenges, such as a refund delay or ineligibility for certain tax credits, including the Child Tax Credit and American Opportunity Tax Credit.

Who needs to renew?

If you plan to file a federal income tax return next year, and you have either an unused or expiring ITIN, you will need to take action.

• Unused ITINs: An ITIN not used on a federal income tax return in the last three years will no longer be valid for use on a tax return starting Jan. 1, 2017, therefore it is will need to be renewed. The renewal period begins on October 1, 2016.
• Expiring ITINs. Any ITINs issued before 2013 will begin expiring this year, and taxpayers will need to renew them on a rolling basis. The first ITINs that will expire under this schedule are those with middle digits of 78 and 79 (e.g.  XXX-78-XXXX). The IRS will mail letters (via IRS Letter 5821) to this group of taxpayers starting in August to inform them of the renewal process.

How to renew your ITIN

To renew an ITIN, taxpayers must complete an Application for IRS Individual Taxpayer Identification Number, also known as Form W-7, and include all required information and documentation.

There are three ways taxpayers can submit their Form W-7 application package:

1. Mail the Form W-7 (along with the original identification documents or certified copies by the agency that issued them) and a copy of Letter 5821 to the IRS address listed on the form.
2. Call and make an appointment at an IRS Taxpayer Assistance Center.
3. Submit the form through an IRS-authorized Certifying Acceptance Agent.

Kaufman Rossin is a Certifying Acceptance Agent and can assist our clients with obtaining an ITIN and submitting any required forms. Please contact me or another member of Kaufman Rossin’s international tax team if you have questions or need assistance with renewing your identification number.