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IRS Issues New ITIN Procedures

30/11/2012


​​​Like most revenue authorities around the world, the United States’ Internal Revenue Service tracks people by number, not name.

For individuals, there are two kinds of numbers: U.S. citizens, residents, and people with work permits are issued Social Security Numbers (“SSNs”). Everyone else uses Individual Taxpayer Identification Numbers (“ITINs”).

If you’re in the “everyone else” category, and earn U.S.-source income, say from renting out a property, owning an interest in a partnership, holding money in a bank account, or if you’re selling a U.S. property, you need an ITIN.

ITINs have been around in their current form for about 16 years. Over the past number of years, however, some people have provided ITINs to U.S. employers as evidence they are legally able to work in the United States. Since SSNs and ITINs look the same (both have 9 digits), many U.S. employers don’t notice the difference.

In order to cut down on such fraud, in June 2012 the IRS announced restrictions on the issuance of ITINs (see IR-2012-62).

The major impact of the June announcement was to require original or certified identification documents to be sent to the IRS when applying for an ITIN (in most cases). Not many people wanted to send the IRS a birth certificate, driver’s license or passport. The practical response in Canada was to get a certified copy of one’s passport, and send that in with the application.

The IRS has announced that it will be tweaking these new requirements beginning January 1, 2013 (see IR-2012-98)

There are some interesting changes:

  • ITINs will expire after 5 years (renewals will be allowed). In the past, a number was permanent.
  • In most cases, a Certifying Acceptance Agent (“CAA”) will once again be allowed to certify identity documents, so the originals don’t need to be sent to the IRS. You will be able to bring in original documents, and walk out with them.
  • With a dependent child, a copy of the passport certified by Passport Canada, will still be required to be sent to the IRS, even with applications processed by a CAA. For children under age 6, documentation can include medical records.
  • CAAs will need to meet new requirements. As a practical matter, to be a CAA outside the United States, one would have to be a U.S. attorney or CPA.
  • Outside the United States, some tax attachés at some U.S. embassies will be able to certify copies of documents.
  • Inside the United States, it will also be possible to have copies certified by some Taxpayer Assistance Centers and other locations.
  • As was true before June, this type of certification is not required for individuals who only have withholding tax issues, and are using a CAA.

Full details on the new rules are here.

To find out how to obtain an ITIN, click here.

MNP can process ITINs through all of its offices across Canada.