The ABA Section of Taxation submitted comments drafted by clinical professor Sarah Lora, Director of the Low-Income Taxpayer Clinic, to the Internal Revenue Service (IRS) in February. The comments specifically address recent changes to Form W-7, Application for IRS Individual Taxpayer Identification Number, which makes it more difficult for many taxpayers to file income tax returns.
Individual Taxpayer Identification Numbers (ITIN) allow individuals who do not qualify for a Social Security Number, such as undocumented immigrants, to file income tax returns and comply with federal and state tax filing requirements. The tax code also allows the issuance of ITINs to certain non-resident dependents from Canada and Mexico, providing a tax benefit to U.S. taxpayers with families they financially support in neighboring countries. “Recent changes to the ITIN application process under Form W-7 have made it challenging for many taxpayers to access a once attainable number,” Lora stated.
Since the IRS began issuing ITIN numbers in 1996, those who already obtained an ITIN did not have to reapply or renew once the IRS issued a number. Much like a Social Security Number (SSN), the ITIN was for life. “The new renewal process has made filing taxes an unduly burdensome process for immigrants by making it time-consuming and expensive,” Lora explained. “Immigrants often pay tax preparers or certified acceptance agents to help them fill out the application, plus other costs. Imagine that after so many years of having and using your SSN, the Social Security Administration suddenly began to require you to submit documentation to prove your identity. That is what is happening to immigrants across the country who are just trying their best to comply with what is already a complicated tax code.”
“This is fantastic work,” Professor Jack Bogdanski said about the comments. “The area in question is a real nightmare for international taxpayers. The ABA Tax Section comments command a great deal of attention at the IRS. So this is making a real difference on behalf of some vulnerable people.”
The comments recommend the IRS clarify to ITIN holders which credits and tax benefits ITIN holders can receive when applying or renewing an ITIN. “Such clarity will allow ITIN holders to see if it is worth renewing or obtaining an ITIN for a dependent or spouse,” Lora explains. “Current instructions and IRS publications do not provide a list of “allowable tax benefits,” which could create confusion and invite mistakes by taxpayers and their preparers. Having additional information will clarify if an ITIN application is appropriate for spouses and dependents residing outside the United States.” The comments also ask the IRS to clarify whether the tax code allows non-resident dependents from Canada and Mexico to obtain or renew an ITIN.
The ABA Section of Taxation is a vast network of tax lawyers and leading legal experts in taxation. Many of the section members deal day to day with folks affected directly by the burdensome administration of the W-7. “We hope that the IRS takes our comments and suggestions seriously and applies changes to allow for an effective process and administration of the ITIN,” Lora stated.
Lora and her students at the LITC witnessed firsthand the difficulties with the current tax language when they helped immigrant taxpayers fill out renewal applications for their ITIN at a workshop hosted with El Programa Hispano.
