AICPA to IRS: Modify Proposed ITIN Application and Renewal Process

October 20, 2016

The American Institute of CPAs (AICPA) has recommended to the Internal Revenue Service (IRS) that it modify the Individual Taxpayer Identification Number (ITIN) application and renewal process as outlined in IRS Notice 2016-48, which was issued to implement the ITIN provisions in the Protecting Americans from Tax Hikes Act of 2015 (PATH Act).
The IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number for U.S. tax purposes but who do not have, and are not eligible to obtain, a Social Security number from the Social Security Administration.  The PATH Act includes provisions regarding the mandatory expiration and renewal of all ITINs issued before January 1, 2013, as well as updated requirements for new ITIN applications.  Under the PATH Act, all ITINs issued prior to January 1, 2013 will automatically expire and require renewal by the taxpayer on a staggered schedule.  In addition, all ITINs will now expire after three consecutive years of nonuse on an income tax return. 

In its September 27 letter, the AICPA made the following specific recommendations that it believes will help ensure the smooth operation of the ITIN program so that tax filings by taxpayers are not disrupted and so that taxpayers can remain compliant with their annual filing obligations:

  • Clarify in future taxpayer-oriented materials the expiration date of an ITIN which expires due to nonuse for three consecutive years.

  • Allow for the renewal of any ITIN issued prior to January 1, 2013 in advance of its scheduled expiration date.  Also, allow holders of ITINs issued prior to January 1, 2013, regardless of their current residence, to use any Certified Acceptance Agent (CAA), located in the United States (U.S.) or overseas to process their renewal application.

  • Notify the holder of an ITIN if it has expired due to nonuse for three consecutive years.

  • Establish an automated telephone response or on-line system which would allow taxpayers to verify the scheduled expiration date of their ITIN if no further returns are filed.  Alternatively, establish an ongoing notification program to holders of ITINs which are due to expire because of nonuse for three consecutive years.

  • Establish a simplified procedure for holders of ITINs which are used solely on an information return to prevent their ITIN from expiring due to nonuse.

  • Consider, under certain circumstances, allowing holders of ITINs, who reside overseas, to use CAAs located outside of the U.S., to process their renewal application if their ITIN expires due to nonuse for three consecutive years.