On December 18th, President Obama, signed H.R. 2029, the tax (the “Protecting Americans from Tax Hikes Act of 2015”) and spending bills (Consolidated Appropriations Act, 2016) to fund the government for its 2016 fiscal year.
The Act requires individuals who were issued Individual Taxpayer Identification Numbers (ITINs) before 2013 to renew their ITINs on a staggered schedule between 2017 and 2020 either in person before an IRS employee or a certified acceptance agent or by mail under procedures to be developed. Documentation proving identity, foreign status and residency is required for renewal. The Act also provides that an ITIN will expire if an individual fails to file a tax return for three consecutive years.
Similar rules apply to individuals residing outside the United States such as Canadians who applied for ITINS and file U.S. tax returns reporting their net rental income from U.S. real estate.
Individuals that applied for ITINS to complete specific tax withholding IRS waiver forms such as the W8-BEN may also be affected as those forms are generally only in effect for 3 years and must be resubmitted to the withholding agent. Individuals who are in receipt of U.S. pension or royalties don’t file U.S. returns as generally this type of U.S. source income is not connected with a trade or business situated in the United States. A return would be only be filed to obtain a refund if the actual withholding exceeded the rate that is contained in the Canada/U.S. tax treaty.