So Canadian Snowbirds in California need A Taxpayer ID Number to Avoid Mandatory Withholding When Renting Or Selling US Property; But Now It's Harder to Get Taxpayer ID Numbers (hint- Get Read to Send in Your Passport to the US Government...)

November 30, 2012
By Sanger & Manes, LLP on November 30, 2012 9:44 AM |

If you read my most recent post on the importance and (I think really) necessity that Canadian snowbirds obtain US individual taxpayer ID numbers an "ITINs". Remember, Canadian snowbirds must complete an IRS Form W-7 to get a taxpayer ID number, but there's only certain occasions when the IRS will actually comply and issue you one (such as when you fill out a US tax return or when you want to be relieved of the awful mandatory US tax withholding obligation on renting or selling US real estate). It's now a good time to review the process for how the Canadian actually gets an ITIN.

What Documents Must the Canadian Snowbird Submit to Get an ITIN?

An original valid passport is the best document you can give. If you submit that, that's all you need to give. If you don't submit a passport, you'll need multiple documents to prove both your foreign status and identity. The documents must be current, verify your identity (that is, contain your name), and support your claim of foreign status (that you're from Canada). Among the group of documents which you may use are national I.D. cards, visas issued by U.S. Department of State, U.S. or foreign military identification card, civil birth certificates, medical and school records, U.S. state or foreign driver's licenses, U.S. state identification card, foreign voter's registration card and U.S. Citizenship and Immigration Services photo identification. Again, you'll need multiple documents if you're not using the passport.

On June 22, 2012, IRS announced interim change to its ITIN application requirements.
What are the biggest changes to the process of getting a taxpayer ID number?:

1) Notarized copies of key documents are no longer acceptable.

The IRS will continue to require original documentation or copies certified by the issuing agency with the Form W-7 and federal return attached. It will no longer accept notarized copies of documents for ITINs (although, an important note, notarized copies remain acceptable when the Canadian is just getting the withholding back from selling a home via the Form 8288...a full tax return is not necessarily required for that). Documents subject to this requirement include passports. Canadians may be able to request a certified copy of their passport or similar international identification at their local consulate's office.

2) Taxpayer ID Numbers are Now Only Good for 5 Years- They Are No Longer Indefinite:

Newly issues ITINs will expire after five years, rather than be issued for an indefinite period. This will provide additional safeguards to the ITIN program. Taxpayers who still need an ITIN will be able to reapply at the end of the expiration period.

How Long Will the IRS Have My Passport Or Other Documents?

The documents will be returned to applicants using the mailing address on the application via postage paid standard U.S. mail within 60 days of receipt and processing of the Form W-7.

The IRS Knows Its A Hardship For Canadians to Be Without Their Passport For an Extended Period, And Has Steps To Help With That (supposedly)

The IRS has provided alternatives to mailing in passports and other original documents. Trusted outlets other than its centralized ITIN processing site need to be available to review original documentation (although they don't appear to be available yet, so we'll have to wait for that information). While original documents or copies certified by the issuing agency are still required for most applicants, more options and flexibility are provided for people applying for an ITIN.

Certifying Acceptance Agents ("CAAs") and Taxpayer Assistance Centers ("TACs") May Provide an Nice Alternative to Sending in Critical Documents to the IRS

CAAs and TACs will be able to engage in the ITIN process by reviewing original documents or copies certified by the issuing agency, but will be subject to new safeguards. But where these locations are locally that do this, I have no idea.

My Recent Trip to the Local IRS Office in Palm Springs

In the Palm Springs area, we have a local office/TAC at the following location: 556 S. Paseo Dorotea Palm Springs, CA 92264 ((760) 866-6125)). I personally visited there just last week (and waited one hour and half just to ask a question about the new procedures for obtaining taxpayer ID numbers!!!). But they don't review documents at that office, and they don't issue ITINs, as these TACs and CAAs supposedly do (all they do is forward them to the Austin Texas office, so it's hard to see what is gained by going to the Palm Springs office for this purpose...you may as well just mail them in) .