Today’s post looks at the US Internal Revenue Service (IRS) options available to taxpayers residing abroad who need an “Individual Taxpayer Identification Number” (ITIN) to fulfill their US tax filing duties. There are 3 basic options (i) mailing the completed Form W-7, “Application for Individual Taxpayer Identification”, and required identification documents to the IRS (ii) visiting an IRS Taxpayer Assistance Center in the United States; (iii) visiting a US-based Certified Acceptance Agent (CAA) or (iv) working with a CAA located abroad.
The ability to use a CAA located overseas is great news for taxpayers living outside of the United States. Without this option, taxpayers would have no choice but to visit the USA or risk losing their original identification documents sent in with their applications (e.g., by mail).
Who or What is a CAA?
A CAA is a person or an entity (business or organization) who, pursuant to a written agreement with the IRS, is authorized to assist individuals and other foreign persons who do not qualify for a Social Security Number (SSN) but who still need a taxpayer identification number to process a Form 1040 and other tax schedules. The CAA facilitates the application process by reviewing the necessary documents and forwarding the completed forms to IRS. The CAA must undertake rigorous measures before completing the ITIN application. For example, CAAs must conduct an in person interview with each applicant (primary, secondary and dependent) in order to complete the ITIN application. Video conferencing (for example, SKYPE) can be used if the CAA has the original identification documents or certified copies from the agency that issued them in his or her possession during the interview.
Overseas CAA
A list of overseas CAAs as updated by the IRS in May 2019, is available here. There are CAAs located in various countries including Australia and New Zealand, Canada, many European countries, Hong Kong, India, Israel, Japan, Turkey, Mexico, the United Arab Emirates and several other countries.
More information by the IRS on the ITIN program can be found on IRS.gov/ITIN and here.
For those of you who are not very familiar with ITINs, a brief overview is provided below.
What is an ITIN and What is it Used For?
An ITIN is a nine-digit tax processing number issued by the IRS for federal tax reporting only. The ITIN is not intended to serve any other purpose. The ITIN does not authorize one to work in the US and it cannot be used as an identification number or for any purpose outside the US tax system.
Who Needs an ITIN?
The IRS issues ITINs to individuals who are required to have a US taxpayer identification number but who are not eligible to obtain a Social Security Number. If an individual is eligible to obtain a SSN, he should NOT be applying for an ITIN. More on this issue, below.
ITINs are issued to so-called ‘resident aliens’ (e.g., one holding a US visa) and to ‘nonresident aliens’ since both may have a US tax filing or reporting requirement under the US tax laws. Generally, an ITIN will be issued if the individual has such a filing requirement.
Some examples of individuals who need ITINs include a nonresident alien required to file a US tax return. This can occur if the nonresident alien individual has certain types of US source income, such as rental income from a US property. Other individuals who need an ITIN include a foreign individual required to file a US tax return because he qualifies as a US “resident alien” based on the amount of time he has been physically present in the US. Someone who is listed on a tax return such as a spouse (in order to file a joint tax return), or a dependent (in order to claim a dependency exemption) and who is not eligible to obtain a valid SSN, must apply for an ITIN.
Who is Eligible for a SSN?
As mentioned, if an individual is eligible to obtain a SSN, he should NOT apply for an ITIN. US citizens are eligible for SSNs and therefore, they should not obtain an ITIN (this includes dual nationals holding US citizenship and the citizenship of another country). I have had dual national clients tell me that they were advised to obtain an ITIN since obtaining an SSN can be very difficult for adults living abroad who did not obtain a SSN as a child. This is incorrect; a SSN should be applied for, not an ITIN. Obtaining an ITIN will only confuse matters tremendously. This remains the case even if one is attempting to achieve US tax compliance by one of the IRS Streamlined Filing procedures. US citizen taxpayers must have a valid SSN in order to obtain the beneficial provisions regarding penalties in the Streamlined program.
As for non-US citizens, generally, only noncitizens authorized to work in the United States by the Department of Homeland Security (DHS) can get a SSN. Social Security numbers are used to report a person’s wages to the government and to determine a person’s eligibility for Social Security benefits. You need a Social Security number to work, collect Social Security benefits, and receive some other government services. Lawfully admitted noncitizens can get many benefits and services without having a SSN. For example, you do not need a SSN in order to obtain a driver’s license, register for school, get private health insurance, or apply for school lunch programs or subsidized housing.
Is Your ITIN Expiring?
ITINs that have not been used on a tax return for Tax Year 2016, Tax Year 2017 or Tax Year 2018 will expire December 31, 2019. Additionally, ITINs with middle digits of 83, 84, 85, 86 or 87 (e.g. 9NN-83-NNNN) will also expire at the end of the year.
If you receive notice that your ITIN, your spouse’s ITIN, or your dependent’s ITIN is scheduled to expire and you will be filing a tax return or claim for refund in 2020, you should begin the renewal process as soon as possible.
The IRS has compiled a detailed set of FAQs on expiring ITINs and how to go about renewing them. More from the IRS regarding expiring ITINs here
Posted June 27, 2019
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I started the process to become a CAA a couple of years ago and discovered since I reside abroad I would not be eligible to provide such services. According to Section 203 of the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), Pub. L. 114-113, div. Q, enacted on December 18, 2015, the option of utilizing the services of a Certified Acceptance Agent (CAA) for foreign applicants was eliminated. Has something changed?
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I remember when the IRS was dropping overseas CAAs…. they then did an “about face” from what I understand. So you should look into applying again. As cited in my blog post, the IRS clearly lists overseas CAAs on its recently updated page, so it seems pretty clear to me that overseas CAAs are very much utilized! https://www.irs.gov/individuals/international-taxpayers/acceptance-agent-program
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I just sent an email to the ITIN Program Office, forwarding the email where they told me that my application was being rejected, to find out what happened. I have a hard time believing this is true because they were so definitive in that email but if it were true, it would be a wonderful surprise!
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