For years, individuals who don’t qualify for a US social security number and need an ITIN have faced a long, challenging process.

If you have applied for an ITIN before, you know that the process is more involved than just filling out the Form W-7 application form to provide your details. You also have to prove your identity by providing official documents.

You have probably faced the questions:

  • Do I trust the mail and US Internal Revenue Service (IRS) enough to send them my actual passport, birth certificate, or other papers?
  • If I don’t want to send them the actual papers, how do I get certified copies that the IRS will accept?
  • Do I need to travel somewhere to get certified copies, or do I still need to send away my actual documents to someone other than the IRS?

Even those who follow the guidelines and provide what’s needed aren’t guaranteed success. The IRS rejects a high percentage of ITIN applications each year, for a variety of reasons, including some outside of the applicant’s control.

So, what do you do?

While there is no magic formula, the IRS is generally more likely to approve ITIN applications filed through a Certifying Acceptance Agent (CAA).

The Wolf Group recently attended an IRS Tax Conference in New Orleans, LA, to stay abreast of the latest IRS developments, following IRS funding and staffing cuts this year. At the conference, IRS representatives shared that, for 2023, the most recent year for which statistics are available, the IRS rejected 22% of ITIN applications overall; whereas the rejection rate of applications filed by CAAs was only 12.27%.

In this post:

  • We recap the ITIN requirements
  • Explain the steps to obtain an ITIN
  • Give you the latest processing times and statistics on acceptance so that you have a realistic idea of what to expect
  • Explain what a Certifying Acceptance Agent (CAA) is and where to find one

Remind me: Who needs an ITIN?

If you are required to pay US taxes (or need to be listed on a US tax return), and you don’t qualify for a social security number, you will need an ITIN.

Examples of individuals who need an ITIN include:

  • Foreign nationals who are not US tax residents but who earn rental income from or are selling a home in the US
  • Foreign nationals who are not US tax residents but who earn other types of income from the US
  • Foreign nationals who are married to a US tax resident and wish to file a joint US tax return with their US resident spouse
  • Foreign nationals who spend enough days in the US during a given 3-year period that they become US tax residents
  • Children or spouses of foreign nationals who move to the US for work assignments

How do you obtain an ITIN?

To obtain an ITIN, you must complete an IRS Form W-7 and provide documentation to confirm your identity and your connection to a foreign country. The following table from the Form W-7 instructions shows which items can be used as evidence of your connection to a foreign country (“foreign status”) or identity:

When providing your documents you have two options:

  1. You can send your original documents together with your W-7 application, or
  2. You can send certified copies of your documents.

If you provide certified copies, there are very specific requirements.

  1. The “original issuing agency” that provided you the document must make an exact copy and certify it with the agency’s official, stamped seal. Alternatively, officers at US embassies and consulates overseas can provide certification and authentication services.
  2. Notarized documents are not sufficient. The documents must be certified by the original issuing agency.

Once you complete your Form W-7 application and compile your documents or certified copies, you mail them to the IRS. Then, once the IRS processes your application and reviews your documentation, they will respond to you by mail to either provide your ITIN or explain why they are rejecting your application.

Why is this process problematic?

Historically, the ITIN application process has posed a number of challenges for applicants:

  • Obtaining the proper certified copies can be difficult. Often, obtaining the certified copies means visiting the issuing agency or US embassy or consulate in person. This is not always practical or feasible, as many individuals live far from those offices.
  • Processing times have been slow. The IRS website estimates it will take 7 to 11 weeks to process applications, but in practice, the processing time can take 6 to 8 months.
  • Sometimes, paperwork is lost or rejected. Mail sent to the IRS can sometimes be received but then go missing. In other cases, the paperwork that the issuing agency supplied and certified does not meet the appropriate standards.
  • Understanding of documentation requirements may vary by IRS agent. IRS agents may not all have the same understanding or training. Some may reject certain documentation as invalid, when another agent would consider it valid.
  • One out of every 5 applications is rejected. As mentioned above, the most recent statistics from 2023 show that the IRS rejected 22% of ITIN applications.
  • ITINs can expire after 3 years, if not used. Some US non-residents are not required to file a US tax return every year. If an ITIN is not used for any 3 consecutive tax years, it will expire, and you will need to renew it using the same process as described above.

To give yourself the best chance of success, the Wolf Group recommends that anyone applying for an ITIN use a Certifying Acceptance Agent (CAA).

What is a CAA?

A CAA is an individual who completes special training courses specifically to learn how to:

  1. Verify the authenticity of your identity documents, as well as the documents used as evidence of your connection to a foreign country (“foreign status”)
  2. Help individuals complete Form W-7 applications

These individuals are often financial services professionals who have undergone the specialized training courses and passed a test in identifying fraudulent documents.

As a result, they are authorized by the IRS to not just review your documents, but also to officially verify their authenticity. This means they can return your original documents to you on the spot, without your having to submit them to the IRS. They can also help you finish the ITIN application and mail it to the IRS for processing.

Furthermore, if the IRS rejects an application that a CAA helped you prepare, the CAA can work directly with the IRS to clear up the matter.  

You can find a more comprehensive list of how CAAs can help in the ITIN application on the IRS website.

How can I find a CAA?

You can find a list of both CAAs and non-CAA agents in your area on the IRS website. There are CAAs located in both the United States and foreign countries.

To make sure the agent is a CAA, make sure their name does not have an asterisk (*) next to it. Names with asterisks are not full acceptance agents. These are professionals who are not able to verify the authenticity of your documents.

 

The Wolf Group is a US CPA firm that specializes in providing international tax services. We have been assisting foreign nationals with their US tax planning and US tax return preparation since 1983. Year-round, we follow IRS trends and new developments and advise our clients on the best ways to work with the IRS to meet their needs.

At the time of this post, we are not an IRS Certifying Acceptance Agent. However, we have provided CAA services in the past and may do so again in the future, should conditions change.

Pursuant to Circular 230, promulgated by the Internal Revenue Service, any US tax advice contained in the body of this writing is not intended or written to be used, and cannot and should not be used, by any recipients as specific tax advice related to their facts and circumstances. Taxpayers should consult their local tax professional and/or attorney to obtain specific tax advice related to their facts and circumstances.