Employees without SSNs, Look out for ITIN Issues

Published: 10/21/2016 7:28:36 PM

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A new act was signed into law as of 2015, and will be affecting many Southern California residents. The Protecting Americans from Tax Hikes (PATH) Act changes an important use of the Individual Tax Identification Number (ITIN).

An ITIN (pronounced "eye-tin") is a tax ID issued to many employees from outside the country. The IRS issues ITINs to individuals who have a need to file a Federal tax return, but are ineligible for a Social Security Number (SSN).

Effective on tax returns starting January 1, 2017, any ITIN that

has not been used for three years consecutively will become invalid.

The immediate impact on the employee is that they will need to apply for a new ITIN, which may create a funnel of applicants and grind that process out over a long period of time.


Applying for a New ITIN

Applying for an ITIN requires filing a federal tax return as well as a W-7 Form Application. The W-7 Form should be filed with a federal income tax return attached, as opposed to the tax return being mailed separately as per the form 1040, 1040A or 1040EZ instructions.

It is recommended that if an employee's ITIN is not yet invalid, they submit a federal income tax return as soon as possible to prevent their current ITIN from expiring.

Those that do not yet have an ITIN, but need to furnish a federal tax identification number or file a federal income tax return can apply using the same process (the W-7 Form Application). For detailed information and instructions, or general help with questions about the ITIN and this new change, check the FAQ.