As the IRS promised when it issued the strict new individual taxpayer identification number (ITIN) procedures earlier this year, it has issued slightly easier procedures, effective Jan. 1, 2013, for the 2013 filing season (FS-2012-11). While some requirements have been eased slightly, others have been made more stringent. The IRS stresses that the rules will continue to evolve as it gains experience, and it encourages comments from interested parties.
Under the interim rules issued in June 2012, the IRS would not issue ITINs unless the applicants provided original documents, such as passports or birth certificates, or certified copies of those documents from the issuing agencies (IR-2012-62). Previously, ITINs could be issued based on notarized copies of the required documents. After June 2012, ITINs could not be issued based on applications submitted through certifying acceptance agents (CAAs) unless they attached original documentation or copies of original documents certified by the issuing agency. In response to concerns from practitioners, including the AICPA, the IRS issued temporary procedures in October 2012 to be used by taxpayers who needed ITINs to file tax returns due by Oct. 15, 2012.
Beginning in 2013, individuals who need ITINs must still supply original documents, such as passports or birth certificates, or certified copies of those documents from the issuing agencies. Acceptable identification documents include passports, national identification cards, visas issued by the U.S. State Department, U.S. or foreign military identification, U.S. or foreign driver’s licenses, civil birth certificates, medical and school records, and other items (a full list is on the IRS website).
To alleviate concerns over parting with these documents for long periods (let alone the risk of having one’s passport misplaced by the IRS), the new procedures involve setting up Taxpayer Assistance Centers as well as Tax Attaché offices in London, Paris, Beijing, and Frankfurt, and other taxpayer sites where documents may be reviewed.
In addition, beginning in January 2013, CAAs can once again verify the authenticity of identification documents for ITIN applicants and their spouses and do not need to send original documents to the IRS. But ITIN applications for dependents still must be submitted with original documents. Late in January 2013, however, the IRS promises to set up Taxpayer Assistance Centers where dependents’ documents can be reviewed so taxpayers do not have to part with originals.
Another of the more stringent new requirements is that new ITINs will be effective for only five years, after which time taxpayers have to reapply for one.
The standards for CAAs have been significantly strengthened by allowing only those who are covered under the professional standards of Circular 230—attorneys, CPAs, enrolled agents, and registered tax return preparers—to qualify as CAAs. CAAs are also now required to complete a forensic document identification training course. The CAA application and renewal processes remain unchanged.
The IRS also announced heightened review of documentation related to child tax credits by requiring more information to be sure residency requirements for these credits are met. This is probably in response to concerns about nonresidents successfully claiming these credits.
These new rules, like the interim ones, do not apply to military spouses and dependents without a Social Security number who need an ITIN, or nonresident aliens applying for ITINs for the purpose of claiming tax treaty benefits. In addition, taxpayers who filed their 2011 returns on extension and students and exchange visitors participating in the Student and Exchange Visitor Program are not subject to these new rules.
