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 That policy is now rescinded, and ITINs issued after Jan. 1, 2013, that would have expired under the old policy will remain in effect as long as the ITIN-holder continues to file U.S. tax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.

SPONSORED REPORT

Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.

QUIZ

News quiz: IRS warning on cyberattacks and a change in pension rules

Once again, the IRS sounds the alarm about a threat from cyberthieves. See how much you know about this and other recent news with this short quiz.

CHECKLIST

Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.