More than 2 million Individual Taxpayer Identification Numbers are set to expire at the end of 2018. Affected taxpayers who expect to file a tax return in 2019 must submit their renewal applications as soon as possible to beat the rush and avoid refund delays next year.
Here are several facts about which ITINs are expiring and how taxpayers renew them:
ITINs that have not been used on a federal tax return at least once in the last three consecutive years will expire Dec. 31, 2018.
ITINs with middle digits 73, 74, 75, 76, 77, 81 or 82 will also expire at the end of the year. An example of this is 9NN-73-NNNN. These numbers need to be renewed even if the taxpayer has used it in the last three years.
This summer, the IRS is sending the CP-48 Notice , You must renew your Individual Taxpayer Identification Number to file your U.S. tax return, to affected taxpayers with expiring ITINs that have been used at least once in the past three years.
The notice explains the steps for taxpayers to take to renew the ITIN if they will include it on a U.S. tax return filed in 2019.
Taxpayers who receive the notice after renewing their ITIN do not need to take further action unless another family member is affected.
Taxpayers with an ITIN that has middle digits 73, 74, 75, 76, 77, 81 or 82, as well as all previously expired ITINs, have the option to renew ITINs for their entire family at the same time.
ITINs with middle digits of 70, 71, 72, 78, 79 or 80 have previously expired. Taxpayers with these ITINs can still renew at any time.
To renew an ITIN, a taxpayer must complete Form W-7 and submit all required documentation.
ITINs are used by people who have tax filing or payment obligations under U.S. law but who are not eligible for a Social Security number. ITIN holders who have questions should visit the ITIN information page on IRS.gov and take a few minutes to understand the guidelines.
Taxpayers who make an effort to comply with the law, but are unable to meet their tax obligations due to circumstances beyond their control may qualify for relief from penalties.
After receiving a notice stating the IRS assessed a penalty, taxpayers should check that the information in the notice is correct. Those who can resolve an issue in their notice may get relief from certain penalties, which include failing to:
File a tax return
Pay on time
Deposit certain taxes as required
The IRS offers the following types of penalty relief:
This relief is based on all the facts and circumstances in a taxpayer’s situation. The IRS will consider this relief when the taxpayer can show they tried to meet their obligations, but were unable to do so. Situations when this could happen include a house fire, natural disaster and a death in the immediate family.
A taxpayer may qualify for relief from certain penalties if he or she:
Didn’t previously have to file a return or had no penalties for the three tax years prior to the tax year in which the IRS assessed a penalty.
Filed all currently required returns or filed an extension of time to file.
Paid, or arranged to pay, any tax due.
Before asking for First Time Abatement relief, taxpayers can request that the IRS first consider the reasonable cause relief provision. This preserves access to the First Time Abatement, which taxpayers may only use every three years.
Some taxpayers will receive a letter from the IRS this summer. Taxpayers should not panic and remember that they have fundamental rights when interacting with the agency.
These rights are in the Taxpayer Bill of Rights. Among other things, these rights dictate that letters from the IRS must include:
Details about what the taxpayer owes, such as tax, interest and penalties.
An explanation about why the taxpayer owes the taxes.
Specific reasons about why the IRS may have denied a refund claim.
Taxpayers who receive a letter from the IRS can do some simple things when it arrives. Taxpayers should remember to:
Read the entire letter carefully. Most letters deal with a specific issue and provide specific instructions on what to do.
Compare it with the tax return. If a letter indicates a changed or corrected tax return, taxpayer should review the information and compare it with their original return.
Respond. Taxpayers should:
Respond to a letter with which they do not agree.
Mail a letter explaining why they disagree.
Mail their response to the address listed at the bottom of the letter.
Include information and documents for the IRS to consider.
Allow at least 30 days for a response.
Reply timely if necessary. If a taxpayer agrees with the information, there’s no need to contact the IRS. However, when a specific response date is in the letter, there are two main reasons a taxpayer should respond by that date:
To minimize additional interest and penalty charges.
To preserve appeal rights if the taxpayer doesn’t agree.
Contact the IRS if necessary. For most letters, there’s no need to call the IRS or make an appointment at a taxpayer assistance center. If a call seems necessary, the taxpayer can call the phone number in the upper right-hand corner of the letter. They should have a copy of the tax return and letter on hand when calling.
Keep the letter. A taxpayer should keep copies of any IRS letters or notices received with their tax records.
Knowledge is power, especially when it comes to avoiding tax scams. Here’s what taxpayers need to know to determine whether an encounter — in person, over the phone or by email — is an imposter or an actual IRS employee:
The IRS Does Not:
Call to demand immediate payment using a specific payment method, such as a prepaid debit card, gift card or wire transfer.
Threaten to bring in local police, immigration officers or other law enforcement to have someone arrested for not paying.
Threaten to revoke someone’s driver’s license, business licenses or immigration status.
The IRS Does:
In general, first mail a bill to any taxpayer who owes taxes.
Normally initiate contact with taxpayers through mail delivered by the United States Postal Service.
Present official identification when visiting a taxpayer. Taxpayers have the right to see these credentials, and – if they would like – the representative will provide them with a dedicated IRS phone number for verifying the information and confirming their identity.
Call or visit a home or business under certain circumstances. This includes when a taxpayer has an overdue tax bill, to secure a delinquent tax return or a delinquent employment tax payment, or to tour a business as part of an audit or criminal investigation. Even then, taxpayers will generally receive several letters from the IRS in the mail first.
Assign certain cases to private debt collectors, but the IRS gives written notice to the taxpayer and their appointed representative before contact from a private collection agency.
Offer several payment options. Payment by check should be payable to the U.S. Treasury and sent directly to the IRS, not a private collection agency.
Taxpayers who owed additional tax when they filed their federal return earlier this year should do a “paycheck checkup” as soon as possible. The IRS Withholding Calculator and Publication 505, Tax Withholding and Estimated Tax, can help these taxpayers do a checkup and avoid another possibly bigger tax bill next year.
Following the Tax Cuts and Jobs Act, which was passed last year, there are many changes to the tax law that could affect these taxpayers. Doing a checkup now will help them make sure their current tax withholding is in line with their 2018 tax situation.
Here are some things for these taxpayers to keep in mind:
These taxpayers may not have had enough taxes withheld from their pay throughout 2017, causing them to owe in 2018.
If they continue to have too little withheld from their paychecks the rest of this year, they could find themselves in the same situation again next year.
They might even end up with a larger tax bill when they file their 2018 return next year.
It’s important to remember that if a taxpayer underpays their tax too much, penalties and interest can apply.
The Withholding Calculator can help taxpayers apply the new law to their situation. The results from the calculator can help them make an informed decision about whether to change their withholding this year.
These taxpayers need to adjust their withholding as soon as possible for an even withholding amount throughout the rest of the year.
Waiting means there are fewer pay periods to withhold the necessary federal tax, which could have a bigger effect on each paycheck.
Taxpayers with more complex situations might find that using Publication 505 is a better option for figuring their withholding than using the Withholding Calculator. Publication 505 works better for employees who owe self-employment tax, the alternative minimum tax, or tax on unearned income from dependents. It can also help those who receive non-wage income such as dividends, capital gains, rents and royalties.