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United States – New Law Makes Some Extenders Permanent, Updates ITIN Procedures

United States – New Law Makes Some Extenders Permanent

This GMS Flash Alert reports that new legislation extended or made permanent various measures affecting individual taxpayers, that had recently expired or were set to expire, and temporarily extended certain other expired tax provisions.


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On Friday, December 18, 2015, U.S. President Obama signed into law the “Consolidated Appropriations Act, 2016” (the “Act”).1  The Act retroactively extended and made permanent some tax provisions that had recently expired or were set to expire, and temporarily extended certain other expired tax provisions.  The Act also made some changes to the Individual Taxpayer Identification Number (ITIN) issuance procedures.


Passage of the Act is a significant development, as it had become common practice for Congress to let these tax provisions, often referred to as “extenders,” expire every year or two, making prospective tax planning for both individuals and companies near impossible.  By making many of these extenders permanent, the Act removes the uncertainty as to whether specific tax benefits will be available to taxpayers in 2015 and beyond.

Tax Provisions Extended by the Act

Tax provisions permanently extended by the Act that may apply to individual taxpayers include the following:  

  • The deduction for state and local general sales taxes in lieu of state and local income taxes;
  • The deduction for tuition and fees in relation to certain qualified post-secondary education expenses;
  • The section 179 expense increase, whereby small- and mid-size business owners could immediately deduct the expense of certain qualifying equipment;
  • The exclusion for charitable contributions made from individual retirement arrangements (IRAs);
  • Parity for exclusion from income for employer-provided commuter transit and parking benefits.

Tax provisions extended through 2019 by the Act that may apply to individual taxpayers include the following:

  • The bonus depreciation deduction on qualified property.   

Tax provisions extended through 2016 by the Act that may apply to individual taxpayers include the following:

  • The exclusion for mortgage debt forgiveness, whereby certain mortgage debt that is forgiven as part of a foreclosure of the taxpayer’s principal residence is not included in income;
  • The deduction for private mortgage insurance premiums.

Changes to ITIN Issuance and Deactivation Procedures

The Act codifies, and makes several changes to, the Individual Taxpayer Identification Number (ITIN) issuance and deactivation procedures.  

Under previous Internal Revenue Service (IRS) policy, an ITIN would expire after five consecutive years of non-use.2  Under the Act, ITINs issued after December 31, 2012, will remain in effect unless the individual to whom the number was issued does not file a tax return (or is not claimed as a dependent on a tax return) for three consecutive tax years.  In such a situation, the ITIN will expire on the last day of the third consecutive tax year in which the ITIN is not used.

All ITINs issued prior to 2013 will expire regardless of whether they are actually used on a federal income tax return.  Pre-2013 ITINs will expire on the earliest of the following dates:

  1. December 31, 2015, if the ITIN has already not been used for three consecutive years;
  2. If the holder of the ITIN does not file a return (or is not claimed as a dependent) for three consecutive years, on the last day of such third consecutive year;
  3. Regardless of use, according to the following schedule:
Year ITIN issued Expiry date
Pre-2008 January 1, 2017
2008 January 1, 2018
2009 or 2010 January 1, 2019
2011 or 2012 January 1, 2020


An individual whose ITIN expires under these provisions must apply for a new ITIN under the procedures established by the Act.  The Act authorizes the IRS to issue guidance on the documentation required to support an application for an ITIN.  As with existing procedures, only original documents or certified copies are acceptable.  

The Act also authorizes the IRS to maintain a program for training and approving acceptance agents to process ITIN applications.  Such acceptance agents can include financial institutions, colleges and universities, federal agencies, state and local governments, tax preparers, and other persons authorized by the IRS.   

For those individuals residing outside the United States, an approving acceptance agent cannot be used; the application must either be made via mail or in person to an employee of the IRS or designee at a U.S. diplomatic mission or consulate.

In addition, the Act requires the IRS to implement a system that distinguishes ITINs issued solely for the purposes of claiming tax treaty benefits from other ITINs. 


1  Consolidated Appropriations Act, 2016 (PDF 1.84 MB), H.R. 22.

2  For prior coverage, see Flash International Executive Alert 2014-062 (PDF 42.7 KB) (July 2, 2014).

The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.

The information contained in this newsletter was submitted by the KPMG International member firm in the United States. 

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