As a lawyer specializing in cross border tax and estate planning for Canadians purchasing U.S. real estate, I have experienced my share of questions from clients regarding U.S. tax returns and concerns with respect to U.S. filing requirements for Canadians. A change concerning U.S. filing requirements was recently brought to my attention when my clients, Dave and Sandra, from London, Ontario were in the midst of closing their beach house purchase in Boca Raton. Dave and Sandra planned on renting out their property, and therefore, would be generating an income in the U.S. I advised them to apply for an Individual Taxpayer Identification number (ITIN), which would be required for their filing obligations. Upon printing Form W-7, the necessary form for obtaining an ITIN, my assistant, Jenna Ward, brought to my attention a change to the process of obtaining an ITIN.
An Individual Taxpayer Identification Number (ITIN) is a processing number issued by the IRS to individuals who are not eligible for a U.S. Social Security Number, but are required to fulfill a filing requirement in the U.S. An ITIN is usually obtained for the purposes of filing a US tax return, but may also be obtained for other federal tax purposes.
An important change has been applied to the process of obtaining an ITIN. Prior to June 22, 2012, applicants were able to submit notarized copies of IRS-approved Identification Documents (ID) with their completed Form W-7. Rather than submitting an original driver’s license or passport, applicants could simply take a copy of their ID and have a U.S. notary public certify that the copy is a true copy of the original.
However, as of June 22, 2012, in order to obtain an ITIN, applicants are required to submit original copies of ID from the list below:
• U.S. driver’s license;
• Foreign driver’s license;
• Civil birth certificate;
• U.S. Citizenship and Immigration Services photo ID;
• Visa issued by the US Department of State;
• U.S. military identification card;
• Foreign military identification card;
• National identification card;
• Foreign voter’s registration card; and
• Medical or school records (for dependent’s under 14 yrs. or under 18 yrs. if a student).
Original pieces of photo ID will be returned within no less than six weeks after being received. Coupled with the risk of lost documents, this is a major inconvenience for most applicants.
Fortunately, an alternative to this new rule exists. Certified copies of photo ID, obtained from Passport Canada will be accepted in the absence of original copies.
For a complete list of Passport Canada locations, please see this website.
On a final note, always consult with one of our cross border specialists in order to determine your cross border filing, tax and estate planning needs.
The information contained herein is for informational purposes only, and is not legal advice or a substitute for legal counsel. It is not intended to be attorney advertising or solicitation. If you have a legal question, please consult with a licensed attorney.