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IRS Issues New Rules for Obtaining Foreign National U.S. Tax Identification Numbers

Any non U.S. person required to file a U.S. income tax return that requires a U.S. Individual Tax Identification Number (ITIN) needs to be aware of changes in the manner in which an ITIN can be obtained immediately. Only a U.S. citizen or foreign national with an H1 work visa is permitted to obtain a U.S. social security number. Otherwise in order to file a joint U.S. tax return with a spouse who is deemed to be a U.S. person (either natural, naturalized or who meets the residency test) or be claimed as a dependent an ITIN is required. 

In 2012 the IRS suddenly discontinued the simplified method of issuing U.S. tax identification numbers for foreign nationals, which was attaching Form W-7 to the U.S. tax return on which a foreign dependent was claimed accompanied by a notarized copy of a foreign passport or other approved documentation. Instead they will be required to either mail the original passport or other documentation with the tax return (accompanied by Form W-7). As an alternative to mailing the original documentation, a foreign national is now required to bring the documents to an IRS Certified Acceptance Agent (a list is provided on the IRS website) and obtain a “certificate of accuracy”. Another change is that previously a U.S. person with a non resident alien spouse or child visit a U.S. Consulate or Embassy to have documents authenticated virtually anywhere in the world. However under the new system, U.S. taxpayers residing outside the U.S. (or their families) will need to seek out an IRS Certified Acceptance Agent which are not available in every country (such as India).  However the IRS has recently announced certain alternate procedures for having documents authenticated. These options include some key IRS Taxpayer Assistance Centers (TACs), U.S. Tax Attachés in London, Paris, Beijing and Frankfurt and at Low-Income Taxpayer Clinics (LITCs) and Volunteer Income Tax Assistance (VITA) Centers that use CAAs. 

Additionally, in the case of a dependent child, certain original documentation is mandatory even if a passport is accompanied by an authorized certificate of accuracy. In the case of children under the age of 6 years of age, original medical records must be submitted to the IRS with the U.S. tax return accompanied by Form W-7. If the dependent child is over the age of 6 original school records must be submitted. 

So if you anticipate filing a U.S. income tax return for the year 2012 it is recommended that you begin immediately to obtain the required documentation certification and any other documents such as medical or school records for dependents. Only documents that are authenticated within the past 12 months of filing Form W-7 will be accepted. 

Certain categories of people would be exempt from this new documentation procedure. This includes Nonresident aliens applying for ITINs for the purpose of claiming tax treaty benefits and can attach notarized copies of his documents and send it along with his W7 and tax return. Also members of the U.S. military who need to obtain ITINS for their spouse or dependent children may attach a copy of their military ID to the Form W-7 when filing their U.S. tax return. 

Once the new ITIN is issued it is only valid for five (5) years at which time the ITIN needs to be renewed. Although the IRS has not released guidance as regards to renewal of existing ITINs, they have stated that they will be accepted for tax returns filed in year 2013; however they are considering options regarding either deactivating or refreshing previously issued ITINs. Accordingly those assigned ITINs without a stated expiration date need to carefully monitor IRS news alerts regarding changes to the ITIN validation process. 

One final important consideration is that ITINS are not permissible for tax returns that claim the Earned Income Credit.








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