|Section 203 of the PATH Act layouts the requirements for the issuance of ITINs. The provision requires that individuals who were issued ITINs before 2013 are required to renew their ITINs on a staggered schedule between 2017 and 2020. The provision also provides that an ITIN will expire if an individual fails to file a tax return for three consecutive years. Finally, the provision directs the Treasury Department and IRS to study the current procedures for issuing ITINs with a goal of adopting a system by 2020 that would require all applications to be filed in person.
ITIN Quick Facts:
93% of ITIN applicants submit their W7 application with a tax return.
23 Million ITINs have been issued since 1996.
308,000 ITIN Renewal Letters (5821) have been mailed out since August 2016.
ITINs with middle digits of 78 and 79 are the oldest ITINs in the system.
There are two groups of people who need to renew their ITINs:
How to Renew an ITIN
To renew an ITIN, taxpayers must complete a Form W-7, Application for IRS Individual Taxpayer Identification Number, follow the instructions and include all information and documentation required. Individuals renewing an ITIN do not have to attach a tax return when submitting their Form W-7; however, the applicant should attach letter 5821 if they received it.
There are three methods taxpayers can use to submit their W-7 application package to renew their ITIN. They can:
The schedule for expiration and renewal of ITINs that do not have middle digits of 78 and 79 will be announced this Summer.
What if I Forget to Renew my ITIN?
If an individual files a tax return with an expired ITIN, the IRS will process the return BUT will exclude the exemption and credits associated with the expired ITIN. This may cause the refund to be much less. When the individual finally renews their ITIN, the IRS will then issue the remaining refund.
Tax Pro Tip
Be proactive and reach out to your clients NOW. You should be communicating with your clients at least once a month. Do you have an email newsletter? Do you have a way to text your clients? There are many ways to reach your clients. At the very least call your ITIN clients with middle digits 78 & 79 and let them know to come in now to renew. For more information on the latest ITIN changes, check out these new IRS publications:
Publication 5259 – ITIN Fact Sheet: https://www.irs.gov/pub/irs-pdf/p5259.pdf
Publication 5257 – ITIN Renewals: https://www.irs.gov/pub/irs-pdf/p5257.pdf
C.G. Johnson & Company
Income Tax and Accounting Services
210 E. 3rd Street #305
Long Beach, CA 90802