This GMS Flash Alert reports that the U.S. Congress has proposed legislation that would affect the use of community-based certified acceptance agents for Individual Taxpayer Identification Numbers (ITINs) and the expiration dates of ITINs.
The U.S. Congress has proposed legislation1 that would affect the use of community-based certified acceptance agents for Individual Taxpayer Identification Numbers (ITINs) and the expiration dates of ITINs. If the legislation is enacted:
The proposals are part of the Technical Corrections Act of 2016 (TCA 2016), which is currently under consideration by the U.S. Congress; these changes are not yet in effect. A subsequent Flash Alert will be issued should the proposed legislation be enacted and signed into law.
If these changes are enacted, the process for obtaining ITINs will be easier for taxpayers living outside the United States as they will be able to use community-based certified acceptance agents to obtain an ITIN for purposes of completing their U.S. tax filing obligations. Thus the TCA 2016, if enacted, would enable taxpayers residing outside the United States to submit an ITIN application:
Also, the change to the expiry date for an ITIN means that the taxpayer’s ITIN – in cases where the ITIN has not been used for three consecutive years – will be valid and not expired for an extended period of time as compared with the situation under current rules. The expiry of an ITIN that has not been used for three consecutive tax years would occur on the date following the due date of the tax return of the third consecutive tax year of non-use. Currently, the expiry dates for ITINs that have not been used for three consecutive tax years occur on the last day of the third consecutive year of non-use.3
The U.S. House of Representatives and the U.S. Senate separately introduced proposed legislation in the Technical Corrections Act of 2016, which would amend recently passed tax legislation4 by clarifying certain provisions.
The law as currently in effect under the PATH Act prohibits taxpayers who reside outside the United States from using an approved certified acceptance agent when submitting an application to obtain an ITIN.
The TCA 2016 would amend the current law by clarifying that community-based certified acceptance agents are among the entities available to taxpayers living outside the United States who wish to obtain an ITIN for purposes of completing their U.S. tax filing obligations. Thus the TCA 2016, if enacted, would enable taxpayers residing outside the United States to submit an ITIN application: 1) by mail; or, 2) in person at the Internal Revenue Service, a community-based certified acceptance agent, or at a U.S. diplomatic mission or consular post.
In addition, the TCA 2016 clarifies that the expiration date of an ITIN that has not been used for three consecutive tax years would occur on the date following the due date of the tax return of the third consecutive tax year. Currently, the expiry dates for ITINs that have not been used for three consecutive tax years occur on the last day of the third consecutive year.
ITINs issued prior to January 1, 2013, would expire on the applicable date provided under current law, or, if earlier, the day following the due date of the tax return for the third consecutive tax year if the ITIN has already not been used for three consecutive years. Currently, pre-2013 ITINs are set to expire on the earlier of December 31, 2015, if the ITIN has already not been used for three consecutive years, or, regardless of use, according to the schedule provided in the PATH Act.
If signed into law, the provisions under the TCA 2016 relating to the changes of the ITIN application process and certain deactivation procedures would be effective as if the amendments were included in the original legislation to which the amendments relate. Thus, these changes, if enacted, would be effective as of December 18, 2015.
1 Introduced on April 11, 2016, in the House of Representatives as H.R. 4891 and in the Senate as S. 2775.
For text of H.R. 4891 (PDF 279 KB), click here. For an explanation of the proposed legislation, see Joint Committee on Taxation, Technical Explanation of the Technical Corrections Act of 2016, JCX-16-16 (April 11, 2016).
2 For the Division Q of the Consolidated Appropriations Act, 2016 (PDF 1.84 MB), H.R. 22 (herein referred to as the “PATH Act”), click here. For prior coverage, see GMS Flash Alert 2015-152 (December 23, 2015).
3 For a list of expiry dates under the PATH Act, see GMS Flash Alert 2015-152 (December 23, 2015).
4 See footnote 2.
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.
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