On this blog, we have previously addressed some of the changes introduced by the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). The changes introduced by the PATH Act means that some taxpayers will have to take timely action to ensure that he or she has a valid individual taxpayer identification number (ITIN) for upcoming tax years. While the provisions introduced by the PATH Act were intended to streamline the ITIN process and protect taxpayer PII, many individuals are confused regarding the action they must take.
A Sacramento tax attorney of NewPoint Law Group, LLP are dedicated to assisting taxpayers with an array of legal concerns. If your tax concerns are regarding an ITIN renewal, past mistakes in previous tax returns, or even the failure to file taxes our legal team can provide careful legal guidance to limit the consequences you face. To schedule a confidential consultation with our tax law team, call 800-358-0305 today.
What Are Common Points of Confusion Regarding ITIN Renewals?
Many people are confused about a potential need to renew or reapply for an ITIN because previous program rules were particularly lax and generally did not require a taxpayer to take additional action after an ITIN had been issued. In fact, one of the few ways that an ITIN would be cancelled or become otherwise invalid under the old rule was if the taxpayer applied for and received a Social Security number in his or her name.
Unfortunately for individuals who became accustomed to this system, it is no longer in effect. If you have not looked into whether a previously issued ITIN needs to be renewed, now is the time to make this determination. Working with a committed tax professional can take the guesswork out of this assessment for you. The tax professional can also work to address any other tax concerns you may have after addressing any potential ITIN renewal issue. Addressing tax issues sooner rather than later can often fix tax problems before significant interest and penalties accrue.
How Do I Know if I Need a New ITIN Starting January 1, 2017?
For many taxpayers, the new rules seem confusing and difficult to follow. However, there are generally two operative scenarios that can render an ITIN invalid and both scenarios relate to the passage of time. To start, each ITIN is now assigned an expiration date based upon the year the ITIN was originally issued. For example, an ITIN issued in 2007 or earlier is expiring shortly since it is valid until only January 1, 2017. ITINs issued in subsequent years generally expire in a predictable fashion. Dates for future ITIN expirations include:
- ITINs issued in 2008 are valid until January 1, 2018. There is still some time to address the renewal, but it is prudent to also review other aspects of your tax filings.
- ITINs issued in 2009 or in 2010 are valid for tax filing purposes until January 1, 2019.
- ITINs issues during 2011 or 2012 will remain valid until expiring on January 1, 2020.
Aside from set dates for ITIN expiration, an ITIN can also expire before the above-stated dates due to non-use by the taxpayer. Any individual who fails to use their assigned ITIN for three consecutive tax years, will unfortunately find that their ITIN is no longer valid. He or she will need to apply for a new ITIN before making his or her tax filing.
The failure to address potential ITIN issues can not only be a frustrating experience for a taxpayer but also can result in fines, penalties, and ineligibility to claim certain tax benefits. For instance, potentially multiple old, expired and ITINs can introduce significant confusion to the filing process. Furthermore, the IRS has already gone on record stating that taxpayers who do not take appropriate action will be ineligible for certain tax benefits. In particular, taxpayers with invalid ITINs will not be able to claim the American Opportunity Tax Credit, Child Tax Credit, and other beneficial tax credits. Tax credits are particularly desirable for taxpayers because they result in a direct dollar-for-dollar decrease in tax liability. Individuals should take all required action to ensure that they are not unnecessarily disqualified from receiving these and other tax benefits due to filing errors.
Work with a Strategic California Tax Lawyer
If you have concerns about your tax compliance with all tax obligations including ITIN renewals and tax return filing duties, the Roseville tax attorneys of NewPoint Law Group, LLP may be able to help. To schedule a confidential tax consultation with our legal team, call 800-358-0305 today.