This GMS Flash Alert reports that new legislation extended or made permanent various measures affecting individual taxpayers, that had recently expired or were set to expire, and temporarily extended certain other expired tax provisions.
On Friday, December 18, 2015, U.S. President Obama signed into law the “Consolidated Appropriations Act, 2016” (the “Act”).1 The Act retroactively extended and made permanent some tax provisions that had recently expired or were set to expire, and temporarily extended certain other expired tax provisions. The Act also made some changes to the Individual Taxpayer Identification Number (ITIN) issuance procedures.
Passage of the Act is a significant development, as it had become common practice for Congress to let these tax provisions, often referred to as “extenders,” expire every year or two, making prospective tax planning for both individuals and companies near impossible. By making many of these extenders permanent, the Act removes the uncertainty as to whether specific tax benefits will be available to taxpayers in 2015 and beyond.
Tax provisions permanently extended by the Act that may apply to individual taxpayers include the following:
Tax provisions extended through 2019 by the Act that may apply to individual taxpayers include the following:
Tax provisions extended through 2016 by the Act that may apply to individual taxpayers include the following:
The Act codifies, and makes several changes to, the Individual Taxpayer Identification Number (ITIN) issuance and deactivation procedures.
Under previous Internal Revenue Service (IRS) policy, an ITIN would expire after five consecutive years of non-use.2 Under the Act, ITINs issued after December 31, 2012, will remain in effect unless the individual to whom the number was issued does not file a tax return (or is not claimed as a dependent on a tax return) for three consecutive tax years. In such a situation, the ITIN will expire on the last day of the third consecutive tax year in which the ITIN is not used.
All ITINs issued prior to 2013 will expire regardless of whether they are actually used on a federal income tax return. Pre-2013 ITINs will expire on the earliest of the following dates:
|Year ITIN issued||Expiry date|
|Pre-2008||January 1, 2017|
|2008||January 1, 2018|
|2009 or 2010||January 1, 2019|
|2011 or 2012||January 1, 2020|
An individual whose ITIN expires under these provisions must apply for a new ITIN under the procedures established by the Act. The Act authorizes the IRS to issue guidance on the documentation required to support an application for an ITIN. As with existing procedures, only original documents or certified copies are acceptable.
The Act also authorizes the IRS to maintain a program for training and approving acceptance agents to process ITIN applications. Such acceptance agents can include financial institutions, colleges and universities, federal agencies, state and local governments, tax preparers, and other persons authorized by the IRS.
For those individuals residing outside the United States, an approving acceptance agent cannot be used; the application must either be made via mail or in person to an employee of the IRS or designee at a U.S. diplomatic mission or consulate.
In addition, the Act requires the IRS to implement a system that distinguishes ITINs issued solely for the purposes of claiming tax treaty benefits from other ITINs.
The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
The information contained in this newsletter was submitted by the KPMG International member firm in the United States.
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