NAFSA and other university stakeholders were invited to participate in feedback conference calls with the Internal Revenue Service (IRS) on August 28 and September 13, 2012 regarding changes to the Individual Taxpayer Identification Number (ITIN) process. These changes require most ITIN applicants to submit their original passports to IRS, rather than copies. NAFSA stressed to IRS the legal and practical difficulties that nonimmigrants would face if they were required to submit their original passports to IRS for six to eight weeks of processing, and suggested that SEVIS already tracks and verifies the status and identity of F, M, and J nonimmigrants. On November 29, 2012, NAFSA submitted a letter to IRS that described NAFSA's position and set forth key suggestions, many of which were incorporated into IRS' final policies.
ITIN procedures effective for the 2013 tax filing season are as follows:
Effective June 22, 2012
A June 22, 2012 IRS announcement established a new general policy that requires most ITIN applicants to submit with their ITIN application original documentation establishing identity and foreign status, such as passports and birth certificates, or copies of these documents certified by the issuing agency. The original or copy certified by the issuing agency must be sent to the IRS ITIN processing facility, and processing can take up to two months, according to IRS. Under prior policy, applicants could submit notarized copies of these documents or submit copies through an IRS acceptance agent. The changes appear to be in response to a July 16 report issued by the Treasury Inspector General for Tax Administration, which recommended such changes in an effort to address instances of ITIN fraud.
The June 22, 2012 announcement created two exemptions to the general policy:
- "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 gaming winnings or pension income, or need an ITIN for information reporting purposes. While existing documentation standards (see current W-7 instructions) 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."
Effective October 2, 2012
In an October 2, 2012 announcement, IRS established two additional exceptions, including an exception for F, M, or J nonimmigrants. Those exceptions apply to:
- Noncitizens that have filed extensions for 2011 returns: These are noncitizens who requested an extension of time to file a 2011 federal income tax return for resident and nonresident aliens and choose to not submit originals documents or copies certified by the issuing agency. The ITINs issued under this procedure are temporary, expiring one year from the extended return due date (e.g., Oct. 15, 2013). The noncitizens must submit their W-7 and related identification documents through a Certifying Acceptance Agent (CAA), along with Form W-7 and related attachments. See special instructions for CAAs.
- Individuals admitted to the U.S. under an F, J or M visa who receive taxable scholarship, fellowship or other grants reportable by the school on Form W-2 or Form 1042-S can forward copies of their documents through the PDSO or DSO (for F and M nonimmigrants), or through the RO or ARO (for J nonimmigrants), following specific procedures outlined in IRS' special instructions for SEVP institutions (which include a sample PDSO/DSO/RO/ARO certification letter). These ITIN applications should be mailed by a SEVIS official (PDSO, DSO, RO, or ARO) of a SEVP-approved institution or exchange program to the address listed in the special instructions.
- The June 22, 2012 and October 2, 2012 exemptions and exceptions described above will continue to be effective after January 1, 2013.
- ITIN five-year validity. Effective January 1, 2013, new ITINs will expire after five years. Under prior policy, ITINs had no expiration date. Taxpayers who still need an ITIN will be able to reapply at the end of the expiration period. IRS states that it "will explore options, through engagement with interested groups, for deactivating or refreshing the information relating to previously issued ITINs.
- Certain Certifying Acceptance Agents (CAAs) will be able to review an applicant's original documents and verify their authenticity. The CAA would certify on Form 14194 that they viewed and authenticated the originals, and send the completed Form 14194 with copies of the authenticated originals to IRS in lieu of submitting the orignals documents. CAAs will also need to meet new requirements and will face stronger due diligence standards to verify the accuracy of supporting documentation. For the first time, only individuals who are covered under Circular 230 can serve as CAAs (This includes individuals who are attorneys admitted to practice before the bar, Certified Public Accountants (CPAs), Enrolled Agents (EAs), and registered tax return preparers). Exceptions are made for CAA applicants from financial institutions, gaming facilities, Low-Income Taxpayer Clinics and Volunteer Income Tax Assistance (VITA) Centers. CAAs will also be required to take formal forensic training at their own expense by January 31, 2013 to help them identify legitimate identification documents. The IRS also plans greater oversight and compliance activities with CAAs to safeguard the ITIN process. With respect to dependent children, ITIN applications submitted to IRS by a CAA will continue to be required to include original documentation. For children under six, one of the documents can include original medical records. For school-age children, the documentation can include original, current year school records such as a report card.
- U.S. Tax Attachés in London, Paris, Beijing and Frankfurt will be able to verify original documents.
- Low-Income Taxpayer Clinics and Volunteer Income Tax Assistance (VITA) Centers that have CAAs will be able to verify original documents.
- A limited number of participating IRS Taxpayer Assistance Centers (TACs) are now available to review and certify passports and national identification cards in person for primary, secondary and dependent applicants. See IRS' list of Taxpayer Assistance Center Locations Where In-Person Document Verification is Provided.