ITINs will expire after five years under new IRS policy

BY ALISTAIR M. NEVIUS, J.D.

The IRS announced a new policy concerning individual taxpayer identification numbers (ITINs) on Tuesday: ITINs that are not being used will expire after five years (IR-2014-76). The policy will go into effect in 2016.

The IRS reports that only a quarter of the 21 million ITINs issued since 1996 are being used on tax returns. ITINs are issued to foreigners and others who have to pay U.S. tax but are ineligible for a Social Security number.

The new policy replaces one that was announced in November 2012. Under that policy, ITINs issued after Jan. 1, 2013, would have expired after five years even if they were being used regularly. That policy is now rescinded, and ITINs issued after Jan. 1, 2013, that would have expired under the old policy will remain in effect as long as the ITIN-holder continues to file U.S. tax returns.

Under the new policy, if a taxpayer with an ITIN fails to file a U.S. tax return for five consecutive years, that taxpayer’s ITIN will expire. Anyone whose ITIN expires will have to reapply, using Form W-7, Application for IRS Individual Taxpayer Identification Number.

The IRS did not reveal how it will notify taxpayers that their ITINs have expired, but says it will post this information at a later date on its website.

Alistair M. Nevius ( anevius@aicpa.org ) is the JofA’s editor-in-chief, tax.

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