PATH Act Impacts ITIN Renewal, Raises Competitive Threat to Tax Pros

There are currently 23 million Individual Taxpayer Identification Numbers (ITINs) in the United States; ITINs are required for taxpayers who do not have, and are not eligible to obtain, Social Security numbers.

Under the new PATH Act, ITIN renewals are required starting in October 2016. The new law states that ITINs that haven’t been used on a federal tax return at least once in the past three years will be invalid for use on a tax return unless renewed by the taxpayer. ITINs issued prior to 2013 will also need to be renewed starting this fall. Taxpayers who do not renew may face refund delays and ineligibility or some tax credits. The IRS put together a renewal schedule to assist taxpayers.

As a tax professional, it’s important for you to be aware that some tax stores are appealing to the ITIN market by advertising free renewals for expiring ITINs. The IRS’ ITIN renewal process is already free, but requires forms and identification documentation, so this service may be attractive to taxpayers who are uncomfortable with filing the IRS paperwork themselves.

Clarifying that the renewal process is free and/or assisting your clients with their renewal paperwork may help you continue to provide value to your ITIN clients and ward off any competitive threats.