Individual Taxpayer Identification Numbers

by Paula N. Singer, Esq. 

The federal tax laws require individuals with U.S. income to comply with U.S. income tax filing obligations regardless of their immigration status or lack of legal immigration status. To comply with U.S. income tax filing requirements, an individual must have a U.S. taxpayer identification number (TIN). The TIN for a U.S. citizen is a U.S. Social Security number (SSN). Generally, only foreign nationals who are authorized to work under the U.S. immigration laws are eligible to apply for an SSN. In 1996, the IRS introduced the ITIN to provide individuals who are not eligible for an SSN with a means to comply with the tax laws. An ITIN is a nine-digit tax identification number (TIN) issued by the IRS. The number always begins with the number 9 and has a 7 or 8 in the fourth digit, e.g., 9XX-7X-XXX.

Individuals Eligible for ITINs

The following individuals, who are not eligible to apply for an SSN, are eligible to apply for an ITIN for a federal tax administrative purpose:

a. Nonresident alien required to obtain an ITIN to claim a tax treaty benefit
b. Nonresident alien filing a U.S. tax return
c. U.S. resident alien (based on days present in the United States filing a U.S. tax return)
d. Dependent of a U.S. citizen/resident alien
e. Spouse of a U.S. citizen/resident alien
f. Nonresident alien student, professor, or researcher filing a U.S. tax return or claiming an exception
g. Dependent/spouse of a nonresident alien holding a U.S. visa
h. Other (indicate pre-tax return exception number)

The letters correspond to the category letters on the Form W-7, Application for IRS Individual Taxpayer Identification Number. Individuals claiming a tax treaty benefit must include the treaty country and article number under which the benefit is claimed following category “h.”

Required Documentation

Applicants must submit documentation with their Form W-7 that substantiates the information provided on the form such as a valid foreign passport. The passport information such as the name, date of birth, and country of citizenship, must be the same as the information provided on Form W-7. Foreign nationals who do not submit a valid foreign passport must provide at least two or more of twelve approved documents listed in the Form W-7 instructions that are current and that verify identity with a name and photograph, and support the individual’s claim of foreign status.

The Form W-7 instructions state that the individual submit copies of original documents if the copies are 1) certified by the issuing agency or official custodian of the original record or 2) notarized by a U.S. notary public legally authorized within his or her local jurisdiction to certify that the document is a true copy of the original. To notarize a document, the notary must see the valid, unaltered original document and verify that the copy conforms to the original. The instructions note that notaries public are available at U.S. embassies and consulates worldwide. Foreign notaries are acceptable as outlined by the Hague Convention.

Application Procedures

Generally, individuals need to submit ITIN applications with the original tax return. Foreign nationals requiring an ITIN for the tax return for themselves and/or their dependents must submit their Form W-7 application(s) and required documentation with their original U.S. tax return to:

Internal Revenue Service
ITIN Operation
P.O. Box 149342
Austin, TX 78714-9342

The Form W-7 instructions caution such taxpayers not to use the address in their tax return instructions.

Pre-tax Return Applications

Many foreign nationals have a federal tax administrative requirement for an ITIN prior to submitting their tax return. For example, many foreign nationals receive income subject to withholding taxes in which the income and taxes are reported on information returns such as Form 1042-S, 1099-INT, 8805, or 8288, 8288-A or 8288-B. Also, under new regulations introduced in 2001, exemptions from withholding tax under an income tax treaty, except on income from publicly traded investments, must be claimed on a withholding certificate (Form 8233, W-8BEN, etc.) that includes a TIN.

The Form W-7 instructions issued in January 2007 include a list of four expanded exceptions that allow pre-tax return ITIN applications by individuals with income or expense subject to third-party reporting and by recipients claiming tax treaty benefits. For example, pre-tax return exceptions now include recipients of a taxable scholarship or fellowship grant subject to third-party withholding or tax exempt under a treaty. Instructions for Form W-7 include a helpful chart explaining the additional forms and letters that foreign nationals must submit for a pre-tax return ITIN application.

For more information regarding ITIN applications, refer to IRS Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number.

Paula Singer, Esq., Co-founder and Chairman of Windstar Technologies, Inc. and partner in the tax law firm, Vacovec, Mayotte & Singer LLP, Newton, MA, has over 25 years of experience providing advice and compliance services to individuals and their employers, and payers on cross-border matters.

Watch for Volume 4, Number 3 for a discussion on Pre-tax Return ITIN Applications.

Q: I have an H-1B and am authorized to work in the United States, but it’s been weeks and my Social Security number has not yet been issued. Can I apply for an ITIN?

Nonresident Alien Training Workshop April 24^th – April 27^th

Windstar Technologies, Inc. will hold its next Nonresident Alien (NRA) Training workshop Tuesday, April 24th through Friday, April 27th at the Quincy Marriott in Quincy, Massachusetts. Windstar’s experts will provide a substantive training on immigration rules related to paying foreign nationals, determining tax residency, the special withholding and reporting rules for wages, scholarship and fellowship grants that apply to nonresidents, and exemptions from tax under the law and treaties. Included will be an update on the latest ITIN application rules. All workshop participants will be provided hands-on training on the International Tax Navigator® and its web-based data collection and forms delivery module, FNIS™.

The registration cost is $1,350 for the first attendee from an institution and $1,200 for each additional attendee. There is also an additional $300 fee to attend the Introduction to Tax Navigator session from 12:30 p.m. – 5:30 p.m. on Tuesday, April 24th. A discounted hotel rate of $169 per night for single or double bedrooms is available by calling (617)472-1000 before April 9th.

Paula Singer’s “Top 10 U.S Tax Return Errors by Foreign Nationals” Featured in Tax Notes International

Tax Notes International, the weekly publication from Tax Analyst, featured Paula N. Singer, Esq.’s article on “Top 10 U.S. Tax Return Errors by Foreign Nationals” in their March 5, 2007 edition. Please e-mail editor@windstar.com for a copy of the article.

Windstar Publishing, Inc. Releases “Cross-Winds – What You Need to Know About Exchange Visitors”

Windstar Publishing recently released Cross-Winds: What You Need to Know About Exchange Visitors. The guidebook, authored by Paula N. Singer, Esq., provides information on types of employment, tax status and treaty benefits available to exchange visitors. It also includes documentation and other forms needed by the exchange visitor and their employer.

“What You Need to Know About Exchange Visitors” is part of the Cross-Winds series which provides easy to understand information about complicated tax and immigration-related issues that apply individuals involved in cross-border activities.

Windstar.com Introduces “Foreign National Taxpayers’ Frequently Asked Questions”

Windstar Technologies, Inc. introduces a new article to its website geared toward the specific questions that foreign national tax payers, and their employers, often have in regards to their U.S. tax returns. The "Foreign National Taxpayers’ Frequently Asked Questions" article is a compilation of answers to questions asked to Paula N. Singer, Esq. at tax seminars she presented this tax season at Boston area colleges, universities, hospitals, and corporations for their foreign national students, scholars, and employees. Future questions and answers will be added throughout the year.

“Foreign National Taxpayers’ Frequently Asked Questions” is one of the many tax resources offered by Windstar. Windstar.com offers visitors up-to-date information on the latest nonresident alien and foreign national tax issues, tax treaty information and articles written by Paula N. Singer, Esq. In addition, Windstar Publishing offers eleven tax guidebooks that help foreign nationals and their employers understand the many complex rules and treaty benefit regulations surrounding payment to foreign nationals.

A tax lawyer and partner in the tax law firm, Vacovec, Mayotte & Singer LLP, Paula has prepared tax returns for individuals with cross-border tax matters, both inbound and outbound, for over 20 tax filing seasons.

Windstar Will Dock at These Upcoming Trade Shows and Seminars

California State University Financial Officers Association Conference
April 15 – 17, 2007
Napa Valley Marriott Hotel and Spa
Napa, CA

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SACUBO 2007 Annual Meeting
April 22 – 24, 2007
Cox Convention Center
Oklahoma City, OK
Booth Number 403

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WACUBO 2007 Annual Meeting
May 6 – 9, 2007
Grand Sierra Resort and Casino
Reno, NV

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Fragomen Del Rey Bernsen & Loewy together with Vacovec, Mayotte & Singer Present "Addressing Tax and Immigration Issues Arising Out of International Transfers"
May 9, 2007
Newton Marriott
Newton, MA

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American Payroll Association 2007 Annual Congress
May 22 – 26, 2007
Bally’s Resort and Casino
Las Vegas, NV
Booth Number 1035

Presentations:
Understanding Payments to Foreign Workers
Presented by Paula N. Singer, Esq. and Linda Dodd-Major
May 25
8:00 am - 9:00 am (Part 1)
2:20 pm - 3:50 pm (Part 2)

Understanding Tax Treaty Benefits and Limitations
Presented by Paula N. Singer, Esq.
May 26
8:00 am - 9:30 am

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NAFSA 2007 Annual Conference
May 27 – June 1, 2007
Minneapolis Convention Center
Minneapolis, MN

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New England Payroll Conference
June 6 – 8, 2007
Sheraton Nashua Hotel
Nashua, NH

©Copyright 2007 by Windstar Technologies, Inc. Windstar reserves all rights to this electronic material. Information contained in this publication is based on the best information available at the time of publication.  While believing the information in this publication to be accurate, Windstar accepts no legal responsibility for its accuracy.