What is an ITIN? If your Canadian c...

What is an ITIN? If your Canadian clients are investing in the US they may be asked to provide an Individual Taxpayer Identification Number (ITIN). This number is required when an individual who is not eligible to obtain a Social Security Number (SSN) uncloses an account with a US financial institution, take a bribe fors a US real property interest (the vender needs an identification number to such a degree the purchaser can withhold and remit the required US withholding tax and file the applicable forms with the IRS), or is expose to reporting and withholding upon investments in US partnerships and rental properties. Along with international investors, independent contractors and employee may find that they ne an ITIN to comply with their US tax filing obligations.

An ITIN may be obtained from the Internal reward Service (IRS). The IRS will issue an ITIN to an individual who has US federal tax reporting or filing requirements further does not qualify for an SSN Generally merely US citizens, green card owners and certain visa holders are eligible to obtain an SSN

Until lately an ITIN could be obtained by way of mailing or handing in a complet Form W-7 (Application for IRS Individual Taxpayer Identification Number) to an IRS office, along with an original passport or brace or more original documents that verified the owner's foreign identity and non-US status. The applicant was able to single out from a list of 40 documents acceptable to the IRS for this intention Applicants who were reluctant to yield original documents to the IRS for the four to six-week processing period had the option of having their documents certified on such agents as American notary publics (no non-US notarizations accepted), the offices of the US Embassy/Consulate, and "Authorized Acceptance Agents." (An acceptance agent is an individual, business, or organizationcommonly accounting firms or financial institutions-authorized by dint of the IRS to assist individuals in obtaining ITINs.) prosperous applicants were issued an ITIN card with a nine-digit number that always began with the number nine and had a seven or eight as the fourth digit, in the form 9XX-XX-XXXX

The latest rules

In December 2003 the IRS revised the application requirements for ITINs to make secure that they are only issued to individuals with US tax responsibilities and not for other reasons, of the like kind as providing personal identification. In greatest in quantity cases, the new policy requires applicants to demonstrate a tax ne for an ITIN by way of attaching US federal tax turn backs to their applications (the ITIN application is now a newer version of Form W-7) in a less degree than the new policy, applicants must submit an original or certified model of a valid passport, or a combination of at least sum of two units or more documents from the IRS's reduc list of 13 acceptable documents. The aforementioned certifying agents have not changed.

Exceptions to the "US federal tax go [i]or[/i] come back attached with application" requirement are outlined in Form W-7's instructions, and are subdue to other documentation requirements (go to www.irs.gov to acquire Form W-7, complete with filing in-structions).

It's interesting that undivided of the exceptions allows an individual to apply for an ITIN number if they've uncloseed a US bank account (on the basis that the bank may be required to withhold tax in succession interest payments and report this to the IRS forward a tax form). In order to apply for an ITIN in this category, the individual is required to provide evidence that they've spreaded the account. Ironically, it's unlikely that any bank in the US would exhibit an account for someone who doesn't already have a number! Another exception applies to individuals earning wages: Any applicant in this category who has a visa valid for office must first apply for an SSN with the Social Security Administration (SSA). They must then provide ordeal along with their application for an ITIN, that the SSA has put awayed their SSN application. The Social Security Administration has got to regard with affection that process.

Buy a bigger wallet

To avoid any possible similarities to an SSN card, the IRS will now issue an ITIN authorization verbal expression to successful applicants instead of a card.

Older numbers are no longer valid

Prior to 1996 the IRS issued temporary identification numbers following the same 9XX-XX-XXXX format as an ITIN. Individuals to whom these numbers were issued may not be aware that numbers issued before 1996 are no longer valid. If pre-1996 temporary numbers are used forward a US federal tax respond processing of the return will be delayed until the individual acquires a valid ITIN. just discovered temporary numbers issued by the IRS begin with the epistle "T."

Good luck getting a number-the controls are loathsome, and they hold fast changing!

By Benita Loughlin, CA, and Karin Lypkie

Benita Loughlin, CA, is a partner in International Executive Services with KPMG LLP in Vancouver. Karin Lypkie also works in International Executive Services at KPMG's Vancouver office.

Copyright Institute of Chartered Accountants of British Columbia Jun/Jul 2004

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