Expiring ITIN’s

by Tom Andrews, CPA

More than 2 million ITIN’s (Individual Taxpayer Identification Numbers ) are due to expire by the end of 2018. The expiration of the ITIN’s was prompted by legislation passed in Congress during tax year 2015. The law states that ITIN’s that have not been used on a federal tax return at least once in the past three consecutive years will expire on December 31st 2018.  In addition, ITIN’s with middle digits of 73, 74, 75, 76, 77, 81, or 82 will also expire on the December date.  Taxpayers in either situation must submit a renewal application if they will be filing a tax return in 2019 or they have other uses for that ITIN in 2019.

The individual tax payer identification numbers are becoming a more important tool for nonresidents that may be working, banking, or purchasing real estate in the United States. For nonresident crewmembers more employers are requesting that the crewmember acquire an ITIN prior to joining foreign flagged vessels so that claims for tax treaties may be fully executed. Banks are now requiring nonresidents to have an ITIN in order to open bank accounts in the United States. Selling or renting real estate may also require the nonresident to have an ITIN for the purposes of filing US income tax returns to report the sale and rental of those properties.

Some nonresident crewmembers of objected to application of an ITIN as they feel they may be “on the radar” or their home country may find out about undeclared income. These arguments are of little concern to the withholding agent who can be held personally responsible for any taxes that should have been withheld and as globalization continues to expand some see having an ITIN as a benefit as it assists the yacht payroll processors and banks with executing transactions.

To renew or apply for an ITIN, a taxpayer must complete a form W-7 and submit all required documentation. Tax payers submitting a form W-7 to renew their ITIN are not required to attach a federal tax return however tax payers that are applying for an ITIN for the first time will be required to file this form with their nonresident tax return.  If a yacht crewmembers is applying for an ITIN for the purpose of claiming tax treaty benefits they may do so without filing a tax return however there are several other required steps that are detailed on the instructions of the form W-7.

If you are a nonresident that has a individual taxpayer identification number that is set to expire I would recommend you start gathering the necessary information necessary to renew this form so that there will not be any delays with processing your 2018 income tax return. If you have questions on the application process  you may contact a certified acceptance agent or your accountant to assist you with the process.

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