The IRS has announced that it is implementing new rules to its procedures for issuing Individual Taxpayer Identification Numbers (ITIN) after a report from WTHR in Indianapolis last spring shed light on illegal aliens who use ITINs to commit tax fraud. The new rules will make it more difficult for individuals to obtain ITINs and shorten the length of time that ITINs are valid.
According to the IRS, the new rules are meant to "further protect the integrity of the ITIN application and refund processes."
The WTHR report from earlier this year highlighted stories of illegal aliens who received thousands of dollars of tax refunds by using fraudulently obtained ITINs. Illegal aliens would submit applications for ITINs for children that didn't live in the United States or weren't even theirs and then use those ITINs on their income tax forms to claim the alternate child care tax credit.
The most significant change to the ITIN procedure is that numbers will only be valid for 5 years. Individuals wishing to obtain an ITIN will have to reapply when their current ITIN expires.
The WTHR report also pointed out that IRS officials were instructed to issue new ITINs as fast as possible, but the new rules will require greater scrutiny of the applications. For instance, ITIN applications will require original documentation or copies certified by the issuing agency for proof of eligibility for an ITIN. In the past, applicants were able to submit notarized forms that could be easily forged. The new rules apply to applications filed on behalf of children as well.
The new rules will be in effect for the 2013 tax season.
For more information, see Forbes.com.