To invest in a business in the US, especially for establishing a banking relationship with a US bank or for filing tax returns, a foreign investor often runs into a common problem: they don’t have a federal tax ID number. Most citizens and permanent residents have a Social Security Number, so this isn’t a problem. So, what happens when you’re an international investor without a government issues SSN? Fret not, you can obtain an ITIN, which is an IRS issued Individual Taxpayer Identification Number for those individuals who are not eligible for an SSN from the SSA, such as a foreign national or nonresident alien, but are required to file certain federal tax or information returns.
The IRS began the ITIN program in 1996 and follows the same 9-digit format as a Social Security Number. Generally, a U.S. Federal income tax return must accompany the ITIN application unless the individual meets one of the “exceptions”
Exceptions include:
– Third party withholding passive income
– Wages, Salary, Compensation and Honoraria Payments with Tax Treaty Benefits
– Third Party Reporting of Mortgage Interest
– Third Party Withholding – Disposition by a Foreign Person of the United States Real Property Interest
In order to obtain an ITIN, you must complete Form W-7 and attach a valid U.S. Federal income tax return, unless you qualify for an exception. You must include original, notarized or certified proof of identity documents. Mail all documents to a special department at the IRS.
You may also apply using an IRS Authorized acceptance agent. Acceptance Agents (AA) are persons who have entered into a formal agreement with the IRS that permit them to assist applicants in obtaining ITINs [NOTE: Eric Gros-Dubois and EPGD Attorneys at Law are IRS Authorized Acceptance Agents].
Information that will be asked on a W-7:
– Reason for Applying
– Applicant’s full name (and birth name if different)
– Applicants foreign address,
– Applicants date and place of birth
– Information about a passport of visa
– Applicants signature
Once the process has begun, it usually takes about four to six weeks to receive notice from the IRS assigning tax identification number.
If you are an undocumented alien, you are still eligible to obtain an ITIN for tax purposes however, this does not give you the right to work in the United States, change immigration status, or entitle you to the earned income tax credit of social security benefits. The W-7 form is also available in Spanish and the IRS does not require a payment of a fee for issuing the ITIN overall.
Acceptable documents as proof of identity and foreign status include a valid and current passport, United States citizenship and immigration services photo identification, U.S. driver’s license, United States military identification card, National identification card, U.S. state identification card, Foreign voter’s registration card, or a Civil birth certificate.
If any of this resonates with your or someone you know, EPGD Law is happy to help or answer any questions you may have. Info@epgdlaw.com or 786-837-6787.
