Unused ITINs to Begin Expiring in 2016

With the New Year rapidly approaching, you can be sure of several things: 1) you’ll probably put on a few pounds over the holiday season; 2) there’ll be at least one or two NFL teams that will exceed even their most diehard fans’ expectations, and; 3) a new tax season will be here. Of the three, that last one should warrant some serious attention, especially if you’re one of the millions of people in the United States who’s been assigned an Individual Taxpayer Identification Number – more commonly known as the ITIN.

In accordance with changes announced in 2014, the Internal Revenue Service is scheduled to begin deactivating some ITINs next year. If you’re a current ITIN user who hasn’t heard about this new policy, then it’s something you definitely need to learn about. After all, if your ITIN is one of those that ends up being deactivated this next year, that could present you with some complications the next time you try to file a U.S. tax return.

There were a number of reasons for this policy change, including instances of tax fraud by illegal immigrants with ITINs and allegations that IRS supervisors were ordering employees to approve applications even when they appeared to be fraudulent. In addition to fraud, there is also the fact that only about five million of the twenty-one million ITINs provided to taxpayers in the last two decades are actually showing up on tax returns.

The IRS came to the conclusion that it could reduce the potential for fraud by phasing out those inactive ITINs, and will begin that process this next year. This stands in stark contrast to the 2013 policy change in which the IRS declared that all future ITINs would be automatically deactivated after five years.

That plan provided no real way to effectively track inactive numbers, since every number issued would have needed to be reissued twice each decade. The new plan ensures that the IRS can better monitor which numbers are being used and which are not, and simply remove the inactive numbers from circulation.

So what does that mean for you? Well, if you have an ITIN and have yet to file taxes, be sure to do so during this upcoming tax season. If you fail to do so, and your ITIN hasn’t appeared on a tax return for five consecutive years, you’re probably going to lose that number. And while you can certainly reapply for a new ITIN if you lose your current identifier, you’ll have to once again go through the tedious process of providing passports and other documents to meet the filing requirements.

You still have a number of months to go before you have to start worrying about tax filing season, but it’s never too early to start thinking about how you’ll manage the process. Just remember that you’ll need to use your ITIN if you want to ensure that you don’t lose it. You can find more information about these and other changes to the ITIN by checking the IRS website at irs.gov for updates.

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