Since the program began in 1996, a substantial number of Individual Taxpayer Identification Numbers (ITINs) have been issued to nonresident aliens who were not eligible to obtain U.S. social security numbers. An ITIN must be obtained for the purpose of reporting certain transactions by nonresident aliens that are subject to U.S. income taxation. These transactions include the sale and rental of U.S. real estate.
Under the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), significant changes were made to the ITIN program. Previously, ITINs remained in effect unless the taxpayer applied for and received a social security number. Beginning January 1, 2017, certain ITINs will expire and will be required to be renewed in order to continue to be used for the filing of U.S. federal income tax returns.
There are two key groups of ITIN holders who will need to renew their ITINs in order to be valid for the filing of U.S. federal income tax returns in 2017:
- ITIN holders who have not used their ITINs for the filing of a U.S. federal income tax return for the years 2013, 2014 or 2015, or
- ITIN holders for whom ITINs were issued prior to 2013 containing the middle digits of 78 or 79 (i.e., 9XX-78-XXXX). This is regardless of whether or not the ITIN holders have filed a U.S. federal income tax return for the years 2013, 2014 or 2015.
Effective January 1, 2017, ITINs in either of these two key groups will no longer be valid to use on a U.S. federal income tax return. Beginning October 1, 2016, these ITIN holders can begin renewing their ITINs. Once renewed, the ITIN will remain in effect unless not used on a U.S. federal income tax return for three consecutive years.
No action is needed by ITIN holders not required to file a U.S. federal income tax return for 2016. ITINs not included in the two key groups will require no immediate action from the ITIN holder. The IRS will provide information about the expiration schedule and the renewal process for the remaining ITINs issued before 2013 in future guidance. The expiration and renewal process for the remaining ITINs will be completed over multiple years.
To renew an ITIN, a taxpayer must complete a new Form W-7, Application for IRS Individual Taxpayer Identification Number (version with the revision date September, 2016). Original or certified copies of supporting documentation establishing the taxpayer’s identity and foreign status must be submitted with the Form W-7.