Gokce Tandogdu
ITIN Specialist, itin.net
An ITIN does not technically expire, but the IRS can deactivate it if you do not use it on a federal tax return for three consecutive years. This means that while your ITIN number remains the same, the IRS may stop accepting it for tax purposes until it is reactivated. The IRS began this deactivation process in 2016. If your ITIN has been deactivated due to non-use, you will need to apply for a new one using Form W-7, along with the required supporting documentation. This is a critical point for non-residents and foreign nationals who might only need an ITIN for specific tax filings or business purposes and may not file annually. Understanding the deactivation policy is key to ensuring your tax compliance and avoiding potential issues when you do need to file.
ITIN Deactivation Policy Explained
The IRS deactivates ITINs that have not been used on a federal tax return for three consecutive tax years. This policy is in place to ensure the accuracy and efficiency of the tax system. When an ITIN is deactivated, it means that the IRS will no longer recognize it for tax processing until it is reactivated. This does not mean you need to get a new ITIN number; your original ITIN will remain assigned to you. However, you will need to go through the application process again if you wish to use it for filing.
The deactivation process applies to all ITINs, regardless of when they were issued. The IRS notifies taxpayers whose ITINs are scheduled for deactivation. However, it is crucial for individuals to proactively track their ITIN usage to avoid any surprises. If you anticipate a period where you will not be filing a U.S. federal tax return, it is wise to understand the implications for your ITIN status.
Why is an ITIN Deactivated?
The primary reason for ITIN deactivation is inactivity. The IRS uses ITINs to track individuals who are required to file U.S. taxes but are not eligible for a Social Security Number (SSN). If an ITIN is not used for three consecutive tax years, the IRS assumes the individual may no longer have a U.S. tax filing requirement or has obtained an SSN. This helps maintain the integrity and currency of the IRS's database. Without this process, the system could become cluttered with obsolete or unused numbers, potentially leading to errors and inefficiencies in tax administration.
This policy affects individuals who obtain an ITIN for a one-time filing requirement, such as reporting certain U.S. business activities or claiming tax treaty benefits, and then do not have a subsequent filing obligation for several years. It is essential for these individuals to be aware of how often do ITINs expire in terms of deactivation, even if the number itself is permanent.
How to Check Your ITIN Status
If you are unsure whether your ITIN is active, you can check its status by contacting the IRS directly. You can also request a notice of your ITIN status by mail. The IRS will not provide your ITIN status over the phone for security reasons. You will need to mail or fax a written request to the IRS using Form W-7, Application for IRS Individual Taxpayer Identification Number, and include your name, mailing address, and ITIN. The IRS will then respond by mail with your ITIN status. This process can take several weeks, so it is advisable to check well in advance of any tax filing deadlines.
Alternatively, if you are applying for a new ITIN or reactivating an old one, the process of submitting Form W-7 will effectively confirm its status. If the IRS processes your new application, it implies your previous ITIN was either deactivated or you were issued a new one. It is always best to err on the side of caution and confirm your ITIN status if you have any doubts, especially if you are preparing to file a tax return or engage in business activities requiring an ITIN.
Reactivating or Reapplying for an ITIN
If your ITIN has been deactivated due to non-use, you generally need to reapply for a new ITIN. This involves completing a new Form W-7, Application for IRS Individual Taxpayer Identification Number. You will need to provide original documentation or certified copies of your identification and foreign status, along with a valid U.S. federal income tax return for which the ITIN is needed. The tax return is the primary document that justifies the need for an ITIN. Without a tax return, the IRS will not issue an ITIN.
When reapplying, you can use your original ITIN if you remember it. However, the IRS will assign you a new ITIN if you do not provide your old one or if there are any discrepancies. The application process is the same as for a first-time applicant. You can submit your application directly to the IRS or through a Certified Acceptance Agent (CAA). Using a CAA, like itin.net, can streamline the process as they can verify your original documents on your behalf, eliminating the need to mail them to the IRS. This can significantly reduce the risk of loss or delay associated with postal services and expedite the overall processing time.
What If You Need an ITIN for a U.S. LLC?
Many foreign nationals establish a U.S. LLC for various business purposes, such as holding U.S. real estate or conducting other commercial activities. If you are forming a U.S. LLC and are not eligible for an SSN, you will likely need an ITIN to meet your tax obligations. This is particularly relevant if your LLC has U.S. tax reporting requirements. For example, if your LLC is subject to reporting under Form 5472, Information Return of a 21st Century State Information Return or Transaction with Related Foreign Corporation, you will need an ITIN to file this form. Even if you are not directly conducting business in the U.S., foreign-owned U.S. LLCs often have reporting obligations.
Forming a U.S. LLC is a common first step for foreign nationals looking to engage in business in the United States. It is often a prerequisite for opening a U.S. bank account, which itself can be challenging without a U.S. address or SSN. While some banks may allow opening accounts with an ITIN, others might have stricter requirements. The process of obtaining an ITIN should be considered early in your U.S. business setup plans. Remember that an ITIN is also distinct from an EIN (Employer Identification Number), which is used for business identification and is obtained by filing Form SS-4 with the IRS. You may need both an ITIN for personal tax filings and an EIN for your business entity.
ITINs and Tax Treaties
Foreign nationals may obtain an ITIN to claim benefits under a U.S. tax treaty. Tax treaties are agreements between the U.S. and foreign countries that reduce or eliminate the withholding of taxes on certain types of income, such as dividends, interest, and royalties. To claim these benefits, you typically need to file a U.S. tax return and provide your ITIN to the withholding agent or file the appropriate tax forms with the IRS. If you only obtain an ITIN to claim treaty benefits and do not have other U.S. tax filing obligations, your ITIN could become inactive due to non-use after three years.
It is important to understand the specific requirements for claiming treaty benefits. This often involves identifying the correct treaty article and ensuring you meet the eligibility criteria. The IRS has specific forms and procedures for claiming treaty benefits, and your ITIN is essential for this process. If you are unsure about your eligibility or the proper procedures, consulting with a tax professional experienced in international taxation is highly recommended.
How Long Does it Take to Get an ITIN?
The processing time for an ITIN application can vary. If you apply directly to the IRS by mail, it can take anywhere from 7 to 11 weeks, depending on the volume of applications they receive. During peak tax seasons, this timeframe can be even longer. If you apply through a Certified Acceptance Agent (CAA), the process can be significantly faster. CAAs can review your application and documentation on the spot and forward it to the IRS. While the IRS still needs to process the application, the initial steps are completed much quicker, and the risk of errors that could cause delays is reduced. itin.net, as a CAA, can help expedite this initial submission.
Once the IRS approves your application, they will mail you a CP565 notice, which contains your ITIN. This notice is sent to the address provided on your Form W-7. It is crucial to keep this notice in a safe place, as it confirms your ITIN. If you lose this notice, you will need to go through the process of verifying your ITIN status with the IRS, which can take additional time.
What If You Don't Use Your ITIN?
If you do not use your ITIN on a federal tax return for three consecutive tax years, it will be deactivated by the IRS. As mentioned earlier, this does not mean the number itself is invalidated forever, but it will no longer be functional for tax purposes until reactivated. This deactivation policy means that individuals must be mindful of their filing obligations, even if they are infrequent. For instance, if you obtained an ITIN to meet the requirements for a U.S. LLC and file Form 5472, but then have no further transactions or reporting requirements for several years, your ITIN could be deactivated.
To avoid deactivation, you must file a federal tax return that includes your ITIN at least once every three years. This could be an income tax return like Form 1040-NR (U.S. Nonresident Alien Income Tax Return) or any other tax form that requires an ITIN. If you have any U.S. source income or are required to report certain financial activities, ensure you are filing the appropriate forms. If you are unsure about your filing requirements, it is best to consult with a tax professional who can advise you on your specific situation and help you understand how often do ITINs expire in terms of their usability.
Conclusion: Proactive Management of Your ITIN
While an ITIN itself does not have an expiration date, its usability is subject to IRS deactivation rules based on non-use. The key takeaway is that an ITIN must be used on a federal tax return at least once every three consecutive years to remain active. If your ITIN is deactivated, you will need to reapply using Form W-7 and include a tax return. Proactively managing your ITIN status by filing regularly or understanding your ongoing U.S. tax obligations is essential for non-residents and foreign nationals. This ensures compliance and avoids potential complications when you need to engage with the U.S. tax system for business or personal reasons. For further assistance with ITIN applications or understanding your tax obligations, consider consulting with a qualified tax professional or utilizing services like itin.net for application support. If you are planning to establish a U.S. business, remember to also look into obtaining an EIN and potentially forming a U.S. LLC. You may also need to consider opening a U.S. bank account to facilitate your financial transactions.