Gokce Tandogdu
ITIN Specialist, itin.net
The IRS does not have a formal process for rescinding an ITIN, nor is there a defined timeline for how long it takes to rescind an ITIN if such a process existed. An ITIN is issued for specific tax purposes and remains valid for its lifetime unless it expires due to inactivity or is revoked by the IRS for reasons of fraud or misrepresentation. If you no longer need your ITIN for tax filing purposes, you can simply stop using it. The IRS does not require you to formally notify them or go through any cancellation procedure.
Understanding ITIN Validity and Deactivation
An Individual Taxpayer Identification Number (ITIN) is issued by the Internal Revenue Service (IRS) to individuals who are required to have a U.S. taxpayer identification number but do not have, and are not eligible to obtain, a Social Security number (SSN). This includes many non-resident aliens and others who need to file U.S. tax returns or claim tax treaty benefits. The ITIN is a nine-digit number that begins with the number 9, has a 7 or 8 in the fourth digit, and is formatted as 9XX-7X-XXXX or 9XX-8X-XXXX.
ITINs do not expire automatically based on a specific date, but they can become invalid if they are not used on a federal tax return for three consecutive tax years. The IRS also has the authority to revoke an ITIN if it was obtained fraudulently or in error. This means that if you obtained an ITIN and later discover it was based on incorrect information or fraudulent claims, the IRS can take action to deactivate it. However, this is a revocation, not a rescission initiated by the taxpayer.
When an ITIN becomes inactive due to non-use, you will need to obtain a new ITIN if you subsequently require one for tax purposes. The process for obtaining a new ITIN is the same as applying for an original one, involving submitting Form W-7, Application for IRS Individual Taxpayer Identification Number, along with original or certified copies of identification documents and a U.S. federal income tax return (or a justification for exemption). You can apply directly to the IRS or through an authorized Certified Acceptance Agent(CAA).
Why You Might Think About Rescinding an ITIN
Many individuals consider the concept of "rescinding" an ITIN when they believe they will no longer have any tax obligations in the United States. This often occurs after a business venture has concluded, a U.S. property has been sold, or a period of U.S. residency or work has ended. For example, if you used an ITIN to file a Form 1040-NR, U.S. Nonresident Alien Income Tax Return, or to claim treaty benefits, and you have no further U.S. tax filing requirements, you might feel the ITIN is now redundant. Similarly, if you formed a U.S. LLC and obtained an ITIN for related tax filings (such as Form 5472), but have since dissolved the LLC or sold your interest, you might question the continued need for the ITIN.
However, the IRS's system is designed for identification and tracking of tax liabilities. They do not offer a mechanism for taxpayers to proactively 'cancel' or 'rescind' their ITIN. The number is assigned to you and remains in their records. The IRS's primary concern is ensuring all U.S. tax obligations are met. If you have no future tax obligations, then the ITIN simply remains dormant in their system. The IRS will not penalize you for having an ITIN you no longer use, provided you have met all past tax obligations.
The IRS's Stance on ITIN Cancellation
The IRS has consistently stated that there is no formal procedure for a taxpayer to request the cancellation or rescission of an ITIN. The number is permanently assigned to the individual. If an ITIN has not been used on a federal tax return for three consecutive years, the IRS will automatically deactivate it. This is an automatic process driven by inactivity, not a rescission initiated by the taxpayer. The deactivation notice is typically sent via mail, but it's best not to rely on receiving it.
If your ITIN is deactivated due to inactivity, and you later need to file a U.S. tax return, you will have to apply for a new ITIN. This requires submitting Form W-7 again, along with updated identification documents and the tax return for which the ITIN is needed. The processing time for a new ITIN application can vary, typically ranging from 7 to 11 weeks, depending on the volume of applications the IRS is processing and whether you apply directly or through a Certified Acceptance Agent.
There are limited circumstances where the IRS might revoke an ITIN. These typically involve fraud, misrepresentation, or substantial errors in the application process. For example, if it's discovered that you used false documents to obtain the ITIN, or if you claimed benefits to which you were not entitled. In such cases, the IRS may send a notice, such as CP-48, Notice of Intent to Revoke or Suspend Taxpayer Identification Number. If revocation occurs, it is a formal action by the IRS, not a rescission requested by the taxpayer. The process and timeline for revocation are at the discretion of the IRS and are not publicly defined with specific timeframes.
What Happens If You Simply Stop Using Your ITIN?
If you decide you no longer need your ITIN for tax purposes, the simplest and most effective action is to simply stop using it. Do not include it on any future tax returns or financial documents unless legally required. The IRS will eventually deactivate the ITIN if it remains unused on a federal tax return for three consecutive years. There is no penalty for this, as long as all prior tax obligations have been fulfilled.
For instance, if you used an ITIN to open a U.S. bank account or to facilitate U.S. business transactions, and you no longer have those accounts or business activities, you can cease using the ITIN for those purposes. Financial institutions may require an ITIN for reporting purposes, but if you no longer have a U.S. financial presence, this requirement may fall away. It is important to check with your financial institution regarding their specific requirements and how to close accounts if necessary.
It is crucial to understand that deactivation due to inactivity is different from revocation. Deactivation means the number is no longer considered valid for tax filing due to non-use. Revocation is an active cancellation by the IRS due to a finding of fraud or error. If your ITIN is deactivated, and you later need it again, you must apply for a new one. If it is revoked, you may face more significant consequences, including potential penalties and a more complex process to re-establish tax compliance.
ITIN Expiration and Renewal
While ITINs do not technically "expire" in the way a driver's license does, they can become invalid due to inactivity. As mentioned, if an ITIN is not used on a federal tax return for three consecutive tax years, the IRS will deactivate it. The IRS began a program in 2016 to phase out ITINs that had not been used for a specific period. This program has been ongoing, and the IRS continues to deactivate ITINs based on usage.
There is no "renewal" process for an ITIN in the traditional sense. If your ITIN has been deactivated due to inactivity, or if you have a new ITIN because your old one was lost or stolen, you must apply for a new ITIN using Form W-7. The application process is identical to applying for an initial ITIN. You will need to provide your identification documents, and typically, a tax return for which the ITIN is needed.
The IRS may also issue new ITINs if there are changes to the ITIN numbering system. However, taxpayers are generally notified if their ITIN needs to be changed or reissued. The most common reason for needing to reapply for an ITIN is deactivation due to non-use or if the taxpayer is issued a Social Security number, which then supersedes the ITIN.
If you are unsure whether your ITIN is still valid or if it has been deactivated, you can contact the IRS directly. However, the IRS is often unable to confirm the status of an ITIN over the phone without verifying your identity through a rigorous process. A more reliable method, if you suspect deactivation, is to attempt to file your tax return. If the IRS rejects your return due to an invalid ITIN, you will be notified, and you will then know you need to reapply.
When You Might Need a New ITIN
You will need to apply for a new ITIN in several situations. The most common scenario is when your existing ITIN has been deactivated due to inactivity. If you haven't filed a federal tax return using your ITIN for three consecutive years, the IRS will likely deactivate it. When you need to file a tax return again, you must obtain a new ITIN. This involves completing Form W-7 and submitting it with your tax return and supporting documentation.
Another situation where you might need a new ITIN is if you are issued a Social Security number (SSN). Once you have an SSN, you must use it for all tax filing purposes, and your ITIN is no longer valid. You should notify the IRS of your SSN so they can link it to your tax records and deactivate your ITIN. If you do not report your SSN, you might continue to use your ITIN, which could lead to tax filing errors and potential issues.
In rare cases, the IRS may issue a new ITIN if the existing one is compromised, lost, or stolen, or if there are systemic changes to the ITIN numbering structure. However, these situations are less common. The primary reasons for reapplying are inactivity-driven deactivation or obtaining an SSN.
If you are forming a U.S. LLC and plan to conduct business that requires U.S. tax filings, and you do not have an SSN, you will need an ITIN. This might involve obtaining a new ITIN if your old one is inactive or if you never had one. For business owners, obtaining an Employer Identification Number (EIN) for their LLC is often a parallel process, especially if the LLC has employees or is structured as a corporation. While an ITIN is for individual identification, an EIN is for business identification.
Next Steps After ITIN Deactivation or Revocation
If your ITIN has been deactivated due to inactivity, the process to address this is straightforward: reapply for a new ITIN. You will need to complete Form W-7 again, providing all required documentation. This includes proving your identity and foreign status with original or certified copies of documents like passports or national identity cards. You must also submit the U.S. federal income tax return for which the ITIN is needed, or a valid exception form. Applying through a Certified Acceptance Agent(CAA) can streamline this process, as they are trained by the IRS to assist with ITIN applications and can verify your original documents, eliminating the need to mail them to the IRS.
If, in the rare event, your ITIN is revoked by the IRS due to fraud or misrepresentation, the situation is more serious. Revocation means the IRS has actively cancelled your ITIN. You will likely receive a notice from the IRS detailing the reason for revocation. To re-establish your tax compliance and obtain a new ITIN (if eligible), you may need to correct the underlying issues that led to the revocation. This could involve amending past tax returns, paying back taxes, interest, and penalties, and providing evidence of your corrected status. In such complex situations, seeking professional tax advice from a qualified CPA or tax attorney is highly recommended. The question of "how long does it take to rescind itin" is best answered by understanding that the IRS does not offer this service, and proactive cancellation is not an option.
For individuals planning U.S. business activities, understanding the role of an ITIN alongside an Employer Identification Number (EIN) and potentially a U.S. LLC is vital. While an ITIN identifies you as an individual taxpayer, an EIN identifies your business entity. These are distinct but often complementary requirements for non-residents engaging in U.S. commerce. It's also worth noting that many non-residents find it beneficial to open a U.S. bank account to manage their U.S. business finances, which can also be facilitated with an ITIN or EIN.