In Search Of The Elusive ITIN: The Devil Is In The Data

Individuals whose individual taxpayer identification numbers (ITINs) expire at the end of 2017 can begin sending renewal applications to the IRS. As background, the IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain a Social Security Number (SSN) from the Social Security Administration (SSA).  Because providers of minimum essential coverage must transmit either this number or an SSN for each Covered Individual as part of the annual Affordable Care Act (ACA) reporting requirement, the renewal timeframe is meaningful, as these expirations can potentially impact reporting accuracy.

Which ITINs Expire?
ITINs that will expire at the end of 2017 are those with the middle digits 70, 71, 72, or 80, and those that were not used on a U.S. tax return at least once in the past three consecutive tax years (2014, 2015, or 2016.) Most ITIN holders will be notified by mail.  However, no notice will be sent if the ITIN is expiring because of disuse.

Internal Revenue Code §6055 does not directly order coverage providers to assist individuals with obtaining ITINs. But, since they can generate reporting errors, it helps to have a working knowledge of the ITIN expiration and renewal processes. For individuals interested in renewing their ITIN, they can be directed to IRS Form W-7.  Alas, all is not lost if expired ITINs generate reporting errors.  Since ITINs are not required to be renewed if their sole purpose is to be used on returns filed by third parties, IRS guidance implies expired ITINs are permissible for ACA coverage reporting purposes.

What To Do?
When it comes to ACA reporting, the devil is in the data.  Inaccuracies generate errors, and the IRS expects employers to operate in good faith to resolve them.  Employers who actively communicate with employees on the importance of providing accurate information stand a better chance of minimizing the likelihood of these errors than those who do not.

Need Help?
Baker Tilly Vantagen has been deeply involved with analyzing and understanding ACA mandates since 2010.  Related services include: consultative support, employee education and advocacy, Form 1095 printing and fulfillment services, and Forms 1094/1095 IRS AIR data transmittal. Contact Us