IRS Announces Changes to ITIN Requirements

On June 22, 2012 the IRS announced a first step in what is expected to be a wave of changes to the ITIN application process. These changes are currently in effect until the end of this year, although changes should carry over and be expanded on for the 2012 filing season. The IRS anticipates that very few people should require ITINs between now and the end of the year. The new requirements will affect most of those applicants that submit the ITIN application, or form W-7. In most cases this form is submitted along with a 1040 tax return. These interim changes go into effect immediately. The IRS will monitor feedback from this campaign and make final decisions on how to proceed before 2013. These changes are being made in an effort to protect the integrity of the system while minimizing taxpayer impact.

Effective immediately the IRS will only issue ITINs if the application meets the new requirements. Applications must now be accompanied by original supporting documentation or a certified copy FROM THE ISSUING AGENCY. For example, you must include original copies (or certified agency copies) such as passports and birth certificates when applying for an ITIN. In the past the IRS has accepted notarized copies of these documents when processing an ITIN request, this will no longer be the case. This required documentation can be submitted by mail or can be handed over at a local IRS office. If you choose to deliver the documents in person please know that they will be held and forwarded to the ITIN processing department.

Per the IRS and their press release here, the following groups will not be subject to these changes.

• Military spouses and dependents without an SSN who need an ITIN (Military spouses use box e on Form W-7 and dependents use box d). Exceptions to the new interim document standards will be made for military family members satisfying the documentation requirements by providing a copy of the spouse or parent’s U.S. military identification, or applying from an overseas APO/FPO address.

• Nonresident aliens applying for ITINs for the purpose of claiming tax treaty benefits (use boxes a and h on Form W-7). Non-resident alien applicants generally need ITINs for reasons besides filing a U.S. tax return. This is necessary for nonresident aliens who may be subject to third-party withholding for various income, such as certain gambling winnings or pension income, or need an ITIN for information reporting purposes. While existing documentation standards will be maintained only for these applicants, scrutiny of the documents will be heightened. ITIN applications of this category that are accompanied by a US tax return will be subject to the new interim document standards.

Some taxpayers who have already begun the application process may be required to submit updated copies of documentation. The IRS will instigate contact if this is the case and no further action is required until that point. TaxSlayer Pro will continue to keep you updated regarding these changes. If you have more questions about how this may affect you and/or your clients please contact your TaxSlayer Pro rep today.