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Individual Tax Identification Number (ITIN) Prepared for The 4th Latino Credit Union Conference Compliance Workshop   Fran...
Agenda <ul><li>Individual Taxpayer Identification Numbers (ITIN) </li></ul><ul><li>Exceptions </li></ul><ul><li>Acceptance...
What is an ITIN? <ul><li>An ITIN is a unique 9 digit tax processing number beginning with “9” with the middle two digits r...
An ITIN does NOT…. <ul><li>Entitle the recipient to Social Security benefits or Earned Income Tax Credit (EITC); but maybe...
An ITIN is required if you are  .. <ul><li>A nonresident alien filing a U.S. tax return and not eligible for a SSN  (Reaso...
Requirements Cont. <ul><li>A dependent of U.S. citizen/resident alien  (Reason d on W-7) </li></ul><ul><li>A  * nonresiden...
EXCEPTIONS <ul><li>Exception 1:  Passive Income -treaty benefits or third party withholding (banks, financial institutions...
Exception 1-   Third Party Withholding on Passive Income <ul><li>1(b)  Individuals who have opened an interest bearing ban...
Exception 1 Cont. <ul><li>1(c)  Individuals who are “resident aliens” for tax purposes and have opened up an interest bear...
Exception 1 Cont. <ul><li>1(d)   Individuals who are receiving distributions during the current year of income such as pen...
Exception 3 -  Third Party Reporting of Mortgage Interest   <ul><li>Information reporting and </li></ul><ul><li>withholdin...
Exception 4 - Third Party Withholding Disposition by Foreign Person of US Real Property <ul><li>Information reporting and ...
How to Apply for an ITIN <ul><li>To apply for an ITIN requires a completed Form W-7 and: </li></ul><ul><ul><li>Attach a va...
W-7 Application Process <ul><li>Mailing the Form W-7 and the required attachments to Philadelphia Service Center, Bensalem...
Acceptance Agent Program <ul><li>Acceptance Agents are critical to the success of the ITIN program primarily because of th...
Acceptance Agents Cont. <ul><li>Revenue Procedure 2006-10 </li></ul><ul><ul><li>Acceptance Agent Agreements expire  Decemb...
Acceptance Agent Program Cont. <ul><li>Form 13551 – Application to Participate in the Acceptance Agents Program </li></ul>...
Help and Information <ul><li>Internal Revenue Service </li></ul><ul><li>ITIN Program Office </li></ul><ul><li>401 W. Peach...
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Individual Tax Identification Number (ITIN)

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Individual Tax Identification Number (ITIN)

  1. 1. Individual Tax Identification Number (ITIN) Prepared for The 4th Latino Credit Union Conference Compliance Workshop Francine Prince-Jones ITIN Program Manager
  2. 2. Agenda <ul><li>Individual Taxpayer Identification Numbers (ITIN) </li></ul><ul><li>Exceptions </li></ul><ul><li>Acceptance Agent Program </li></ul>2
  3. 3. What is an ITIN? <ul><li>An ITIN is a unique 9 digit tax processing number beginning with “9” with the middle two digits ranging from 70 to 80. </li></ul><ul><li>The ITIN is issued to individuals required to pay tax or who have a tax reporting requirement to the IRS but do not qualify for a Social Security Number. </li></ul>3
  4. 4. An ITIN does NOT…. <ul><li>Entitle the recipient to Social Security benefits or Earned Income Tax Credit (EITC); but maybe eligible for CTC and ACTC </li></ul><ul><li>Create an inference regarding the individual’s immigration status </li></ul><ul><li>Give the individual the right to work in the U.S. </li></ul>4
  5. 5. An ITIN is required if you are .. <ul><li>A nonresident alien filing a U.S. tax return and not eligible for a SSN (Reason b on W-7) </li></ul><ul><li>A U.S. resident (based on the days present in the United States) filing a U.S. tax return and not eligible for a SSN (Reason c on W-7) </li></ul>5
  6. 6. Requirements Cont. <ul><li>A dependent of U.S. citizen/resident alien (Reason d on W-7) </li></ul><ul><li>A * nonresident spouse being shown on a tax return as an exemption (Reason e on W-7) </li></ul><ul><li>* resident spouse, too. </li></ul>6
  7. 7. EXCEPTIONS <ul><li>Exception 1: Passive Income -treaty benefits or third party withholding (banks, financial institutions, partnerships, annuities, royalty income, etc.) </li></ul><ul><li>Exception 2: Other Income (wages, salary, compensation) –treaty benefits, foreign students on scholarship </li></ul><ul><li>Exception 3: Third party Withholding – Mortgage interest </li></ul><ul><li>Exception 4: Disposition by foreign person of U.S. Real Property Interest- withholding obligations </li></ul>7
  8. 8. Exception 1- Third Party Withholding on Passive Income <ul><li>1(b) Individuals who have opened an interest bearing bank deposit account that generates income which is effectively connected with their U.S. trade or business and is subject to IRS information reporting and/o federal tax withholding; or </li></ul><ul><li>Documentation: </li></ul><ul><li>Submit documentation from the bank that an interest bearing business account was opened that is subject to IRS information reporting and/or federal tax withholding during the current tax year. </li></ul>Federal Tax Withholding and/or Information Reporting must take place within the current tax year. 8
  9. 9. Exception 1 Cont. <ul><li>1(c) Individuals who are “resident aliens” for tax purposes and have opened up an interest bearing bank deposit account that generates income subject to IRS information reporting and/or withholding of federal income tax (or would be except for the dollar threshold amount); or </li></ul><ul><li>Documentation: </li></ul><ul><li>1(c) Submit documentation from the bank stating that you are receiving distributions from a deposit account which are subject to IRS information reporting and/or withholding of federal income (or would be except for the dollar threshold amount) during the current tax year.. An acknowledged (signed or stamped by the Bank) copy of the Form W-9 that you provided to the Bank must be attached to Form W-7/ W-7SP. </li></ul>9
  10. 10. Exception 1 Cont. <ul><li>1(d) Individuals who are receiving distributions during the current year of income such as pensions, annuities, royalties, dividends, etc, and are required to provide an ITIN to the withholding agent (i.e. investment company, insurance company, financial institution, etc.) for the purposes of tax withholding and reporting </li></ul><ul><li>Documentation </li></ul><ul><li>Submit documentation in the form of a signed letter or document from the withholding agent, on official letterhead, showing the individuals’ name and account number, and evidencing that an ITIN is required to make distributions to the individual during the current tax year, which are subject to federal tax withholding and/or reporting requirements </li></ul>10
  11. 11. Exception 3 - Third Party Reporting of Mortgage Interest <ul><li>Information reporting and </li></ul><ul><li>withholding requirements </li></ul><ul><li>apply to third parties </li></ul><ul><li>frequently banks and </li></ul><ul><li>other financial institutions) </li></ul><ul><li>who will request an ITIN </li></ul><ul><li>to enable them to file </li></ul><ul><li>information reports that </li></ul><ul><li>are required by law. </li></ul><ul><li>Form 1098, Mortgage Interest Statement. </li></ul><ul><li>Documentation: </li></ul><ul><li>Individuals who show evidence of a home mortgage loan. This </li></ul><ul><li>would include a copy of the contract of sale or similar documentation, showing evidence of a home mortgage loan on real property located in the United States. </li></ul>11
  12. 12. Exception 4 - Third Party Withholding Disposition by Foreign Person of US Real Property <ul><li>Information reporting and </li></ul><ul><li>Withholding requirements apply </li></ul><ul><li>to third parties frequently banks </li></ul><ul><li>and other financial institutions </li></ul><ul><li>who will request an ITIN to </li></ul><ul><li>enable them to file information </li></ul><ul><li>reports that are required by law. </li></ul><ul><li>Form 8288 - U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests, </li></ul><ul><li>Form 8288-A Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests. </li></ul><ul><li>Form 8288B - Application for With holding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests. </li></ul><ul><li>Documentation: </li></ul><ul><li>Generally imposed on a buyer or other transferee (withholding agent) when a U. S. real property interest is acquired from a foreign person. </li></ul><ul><li>A completed Form 8288-B and a copy of the contract of the sale. </li></ul><ul><li>For the seller of the property, Forms 8288 and 8288A submitted by the buyer should be attached to the Form W-7/W-7SP. </li></ul>12
  13. 13. How to Apply for an ITIN <ul><li>To apply for an ITIN requires a completed Form W-7 and: </li></ul><ul><ul><li>Attach a valid original return or documentation substantiating the exception to the return requirement </li></ul></ul><ul><ul><li>Attach an original or certified copies of identification documents </li></ul></ul>13
  14. 14. W-7 Application Process <ul><li>Mailing the Form W-7 and the required attachments to Philadelphia Service Center, Bensalem, PA. </li></ul><ul><li>Visit a Taxpayer Assistance Centers (TACs) where IRS employees will assist with the preparation of the Form and review the documentation. </li></ul><ul><li>Seek assistance of an Acceptance Agent authorized by the IRS to assist with completion of the Form W-7 and certify the documentation. </li></ul>14
  15. 15. Acceptance Agent Program <ul><li>Acceptance Agents are critical to the success of the ITIN program primarily because of their closer proximity and availability to those needing ITINs for tax purposes. </li></ul><ul><li>AAs can include educational institutions, financial institutions, government entities/military installations, volunteer organizations and tax practitioners. </li></ul>15
  16. 16. Acceptance Agents Cont. <ul><li>Revenue Procedure 2006-10 </li></ul><ul><ul><li>Acceptance Agent Agreements expire December 31, 2006. </li></ul></ul><ul><ul><li>New Agreements will expire 4 years from the date signed. </li></ul></ul><ul><ul><li>FBI Investigations (fingerprinting) </li></ul></ul><ul><ul><li>Tax Compliance checks. Application Form 13551 is required to apply for the AA Program. </li></ul></ul>16
  17. 17. Acceptance Agent Program Cont. <ul><li>Form 13551 – Application to Participate in the Acceptance Agents Program </li></ul><ul><li>Mail applications to address in the instructions (Andover, MA) </li></ul><ul><li>Takes approximately 90 days to process an applications. </li></ul>17
  18. 18. Help and Information <ul><li>Internal Revenue Service </li></ul><ul><li>ITIN Program Office </li></ul><ul><li>401 W. Peachtree St., NW </li></ul><ul><li>Mail Stop 97WI </li></ul><ul><li>Atlanta, GA 30308 </li></ul><ul><li>www.irs.gov </li></ul><ul><li>[email_address] </li></ul><ul><li>Telephone No. (404) 338-8963 </li></ul>18

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