US Cross-Border Tax Blog

Published by W.L. Dueck LLP

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2013 Changes to the US Individual Taxpayer Identification Number ID requirements

Have you earned income from the US, or perhaps sold a personal property in 2013?  If so, there is a very good chance you will need to file a US income tax return.  In order to do so, you will be required to obtain either a US Individual Taxpayer Identification Number (“ITIN”) or a Social Security Number.

If you happen to have a valid US work permit, you are required to apply for a US Social Security Number, a process which is relatively simple as long as you are able to walk into a US Social Security Administration office in the US with the necessary documents.

For the rest, obtaining an ITIN can be an administratively frustrating experience if not done properly.  While the process to apply for an ITIN may appear to be “simple”, it is important to understand a couple of key steps in the process.

  1. When to apply?  While a taxpayer may like to be proactive with their affairs, unfortunately, the IRS will only issue an ITIN where it can be shown an ITIN is required for federal income tax purposes.  The IRS allows for a limited number of situations where upon proof of need, an ITIN will be processed prior to the filing of a US federal income tax return.
  2. How to apply?  Applying for an ITIN requires the completion of a 1-page form and supplying appropriate identification.

The appropriate identification supplied with the application needs to confirm both an individual’s identity and foreign status.  A variety of documents can be relied upon to certify one or the other, however, only a foreign passport can be used as a stand-alone document to meet both requirements.  Not surprisingly, in our experience, the Canadian passport has been the preferred document to use.

While a taxpayer can always send the IRS their original documentation, very few individuals feel comfortable in doing so (including many tax professionals), relying instead on the ability to submit a suitable copy of their original documents.

Effective June 22, 2012, the IRS introduced enhanced document certification requirements.  Previously, the IRS simply required that appropriate identification documentation be notarized by a US notary or certain foreign notaries.  The IRS now requires that the original document issuing agency provide the certified copy (for example, Passport Canada for a Canadian passport).  This new requirement may make the application process a little more time consuming, unless you are prepared to send in those precious original documents.

Our experience in receiving a certified copy of a Canadian Passport from Passport Canada has been quite positive with a turn-around time of approximately five business days.  Be aware that Passport Canada will require that you turn in the original passport during the application process.  If you are outside of Canada and unable to head to a local Passport Canada office, you may be able to obtain a certified copy at a Canadian consulate or embassy.

More recently, the IRS has introduced a five-year expiry date on an ITIN. 

As you prepare for the 2013 tax preparation season, keep in mind these enhanced document certification requirements to help ensure the “simple” IRS ITIN process does not become a time-consuming one.

Written by Daren Raoux, CA, CPA

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