The scope of this article is to give general information to a non US fiscal resident, who needs to request a U. S. federal tax identification number. As space is limited, this article is a summary, and not a comprehensive representation of the treaty of the laws which regulate this matter and its processes, nor does it cover all of the related information as it relates to the legal, immigration and corporate aspects. The focus of the article is to list some general concepts, without entering into the details of exceptions or specific situations. To have a more accurate and detailed information, we recommend consulting a Certified Public Accountant (CPA) and a Lawyer (Attorney).
First, it is important to define the meanings of the different acronyms, that are sometimes used incorrectly (this article is related only to the ITIN):
- ITIN (tax identification number).ITIN is the tax identification number for non US residents or for familial status of fiscal residents who do not have authorization to work in the USA. Format = 9XX-XX-XXXX (always begins with a 9).
- SSN (social security number). SSN is the tax identification number of American citizens, green card holders, or non resident aliens with regular Visas authorized to work in the USA. Format = XXX-XX-XXXX (with the exception of the ones which have 9 as the first number)
- EIN (employer identification number). EIN is the tax identification number for companies or other entities that are not individuals. An EIN can or must be requested also for foreign companies which produce or have a source of income in USA. Format = XX-XXXXXXX
What are the most frequent situations in which a non US fiscal resident must request an ITIN?
- When the non US fiscal resident has or produces any type of income from which the source is in the US (example: occasional compensations, consultancy, sales of tangible assets, etc.)
- Certain income from US sources, often subordinates to withholding (example: some financial interests, royalties, rents, etc.)
- Non fiscal resident members of an LLC which is treated fiscally as a partnership. The income must be reported and taxed directly to the members not the company.
- Witholding is applied to the sale of US real estate property by a non fiscal resident in the US (FIRPTA).
- Children and spouse of a fiscal resident in US (usually a working VISA). ITIN is particularly useful to claim personal exemptions and deductions.
How do you request an ITIN?
The application of the ITIN requires different documents depending on the reason for the request. In general, two documents must always be included:
- Form W-7. W-7 is the IRS form for the application of the ITIN. It must be filled in completely and correctly, duly signed and dated.
- The Identification Document of the applicant, usually the Passport. It is important to note that the original passport can be sent to the IRS, but it is not recommended because it is risky and could slow the process; usually the applicant sends a certified copy (with two exceptions listed below) by the Consulate/American Embassy from the country of residence or (according the instructions) from the issuing Agency of the passport; in theory, it would be the Police headquarters, but most Police headquarters divert the request to the municipality where the applicant is a resident. The Municipal’s certified copy is normally accepted by the IRS, but they can also be denied.
Other required documents depend on the reason for the application: they could vary from: the Operating Agreement of the LLC which has a non fiscal resident member, to the need by a US company to make a withholding for income earned by non fiscal resident, to the IRS letter assigning the EIN number, to the company related to the request, to the Form 8288-B in the event of real estate property sale, etc.
In most cases, the ITIN must be requested with the original income tax return for the related year, which would typically be the FORM 1040-NR (for the non residents) or FORM 1040 for familial status of residents.
Where to apply for the ITIN?
There are three alternatives for submitting the documentation and the application to request the ITIN:
- Mail a certified letter to the IRS, ITIN Operation Austin including Form W-7, a copy of the certified passport and any other documentation needed for the specific case of the ITIN request.
- Apply in person at an IRS Taxpayer Assistance Center “TAC” (for the Miami office, the address is 51 S.W. First Av. in Downtown), bring the required documentation (the only exception is that they can certify the copy of the passport). Applicant must go in person (in the event the applicant is of familial status, the taxpayer who is filing the income tax return must also be present).
- Apply in person to a Certified Acceptance Agent of IRS (CAA) bringing the same required documentation requested for the specific case (also with the exception that the CAA can certify the passport in his/her office).
What are the advantages to using a Certified Acceptance Agent?
- The interview with the CAA that clearly explains the requirements and obligations with the taxpayer.
- The correct completion of the Form W-7
- The inclusion of the correct documents for the specific case.
- The taxpayer does not need to certify the passport in his own country (avoiding costs and time) with exclusion of dependants.
- To avoid long lines in a IRS Taxpayer Assistance Center
- Usually the ITIN requested through a CAA has priority over those submitted by individual taxpayers.
Magnani CPA is an IRS Certified Acceptance Agent in Miami.