First a bit of context to make certain that you are in the affected group. The IRS has defined the need for ITIN’s thusly:
“ITINs play a critical role in the tax administration system and assist with the collection of taxes from foreign nationals, resident and nonresident aliens and others who have filing or payment obligations under U.S. law. Designed specifically for tax administration purposes, ITINs are only issued to people who are not eligible to obtain a Social Security Number.”
So what then is the concern? The issue is whether the Individual Taxpayer Identification Number (ITIN) has been used on a tax return within the last three years. If not, it will expire in 2018. Here is the relevant section:
“All ITINs not used on a federal tax return at least once in the last three years will expire on December 31, 2017.”
A little less than half of the expected 3.2 million tax filers who use an ITIN will be affected by these changes. Make sure that you’re not one of them.
The biggest question then is “Am I one of the individuals who needs to renew their ITIN?”. The answer can be addressed with this quote from the IRS:
“If you need to file a tax return in 2018 and your ITIN has expired or will expire before you file in 2018, we recommend that you submit your renewal application now to prevent potential delays in the processing of your return. If you use an expired ITIN on a U.S. tax return, it will be processed and treated as timely filed, but without any exemptions and/or credits claimed and no refund will be paid at that time. You’ll receive a notice explaining the delay in any refund and that the ITIN has expired.”
All of the details are referenced here in an announcement marked “Important Reminders“.
There are, as usual, additional contingencies that require specific actions. For example:
“Additionally, all ITINs issued before 2013 with middle digits of 70, 71, 72 or 80 (Example: (9XX-70-XXXX) will expire at the end of the year.”
If you need to file a tax return in 2018, IRS recommends you submit a Form W-7, Application for IRS Individual Taxpayer Identification Number in order to renew your ITIN.
There will be one last indicator that you are among the affected group. The IRS will begin sending the CP-48 Notice of necessary ITIN renewal to affected taxpayers later this summer.
The IRS is doing a creditable job addressing the diversity of tax payers here in the United States and has provided a very useful “Frequently Asked Questions about Individual Taxpayer Indentification Number (ITIN) Expiration”
If English is not your first language and you would like to work with LSL CPAs we have professionals that speak Spanish, Portuguese, Chinese, Hindi, Vietnamese, Russian and, of course, English.
Taxes in the United States are complex. Taxes for foreign nationals and business owners earning money here but maintaining citizenship elsewhere are even more complex. Feel free to contact Yana Weaver, our International Tax Accountant, at (714) 569-1000.
*This article should be read as “informational only” and not construed as tax advice. When dealing with topics as complex as International Taxation you should always consult and take the advice of a tax professional.
Here is an article of reference:
Reference from IRS.gov:
With over twenty years of experience in private and public accounting, Yana has extensive knowledge in many areas of taxation. She is serving clients in manufacturing, healthcare and real estate industries providing them with entity planning support, transaction structuring, practice entry and exit strategies, cross-border transactions and other important financial matters.