Individual Tax Identification Numbers - ITIN

Background - Who Needs an ITIN?

The federal tax laws require individuals with U.S. income to comply with U.S. income tax filing obligations regardless of their immigration status. To comply with U.S. income tax filing requirements, an individual must have a U.S. taxpayer identification number (TIN). The TIN for U.S. citizens is a U.S. Social Security number (SSN). Generally, only foreign nationals who are authorized to work under U.S. immigration laws and are employed are eligible to apply for an SSN. In 1996, the IRS introduced the Individual Taxpayer Identification Number (ITIN) to provide individuals (mainly foreign individuals) who are not eligible for an SSN with a means to comply with the tax laws. An ITIN is a nine-digit tax identification number issued by the IRS. It always begins with the number 9 and has either 7 or 8 in the fourth digit, e.g. 9XX-7X-XXX.

Note: An ITIN does not change your immigration status or your right to work in the U.S. An ITIN is for tax purposes only. An alien individual cannot have both a social security number and an ITIN.

While an ITIN is mandated by federal law for tax filing purposes, the University will make certain payments to foreign nationals who have applied for an ITIN while their Form W-7 application is pending. These payments include scholarship or fellowship grant payments to students and research fellows, and honorarium payments to short-term visitors. However, pursuant to IRS regulations, the University will not exempt such payments from tax withholding under a U.S. tax treaty unless the recipient has applied for and actually received an ITIN.

Eligibility

As outlined in the Instructions for Form W-7 (Application for IRS Individual Taxpayer Identification Number) the following individuals, who are not eligible to apply for an SSN, are eligible to apply for an ITIN for federal tax purposes:

• Nonresident alien required to obtain an ITIN to claim a tax treaty benefit
• Nonresident alien filing a U.S. tax return or filing a U.S. tax return only to claim a refund
• U.S. resident alien (based on days present in the U.S.) filing a U.S. tax return
• Dependent of a U.S. citizen/resident alien
• Spouse of a U.S. citizen/resident alien
• Nonresident alien student, professor, or researcher filing a U.S. tax return or claiming an exemption
• Dependent/spouse of a nonresident alien holding a U.S. visa

Income Tax Treaty Claims

IRS tax rules require recipients claiming exemption from withholding on U.S.-source income under an income tax treaty to submit to the payer prior to payment a withholding certificate that includes a TIN. Tax-exempt income of nonresident aliens from personal services (employment), self-employment, or scholarships and fellowships paid to or on behalf of recipients in F, J, M, or Q immigration status, require such a withholding certificate (Form 8233 or Form W-8BEN).

Form W-7 instructions now contain an exception (exception #2) allowing individuals claiming treaty benefits from taxes on scholarships and fellowship grants and taxes on honorarium payments to apply for an ITIN prior to submitting a federal tax return.

Scholarships, Fellowships or Grant Income :

• Individuals that are claiming tax treaty benefits for an exemption from taxes on income from scholarship or fellowship grants (See Sample Form)

  • Check box f and box h on Form W-7.
  • Enter “Exception #2” on line h and indicate treaty country and treaty article number (This can be obtained from UVa Foreign National Tax Office at 434.924.1377)
  • In addition, you must submit evidence of treaty exemption including:
  • A copy of Form W8-BEN or Form 8233 submitted to the University Foreign National Tax Office *A letter or official notification from the University awarding the scholarship or fellowship.

• Individuals that are not claiming a treaty exemption under a tax treaty See Sample Form

  • Check box f and box h on Form W-7.
  • Enter “Exception #2” on line h.
  • In addition, you must submit the following along with Form W-7: ** A letter from the Designated School Official (DSO) or Responsible Officer (RO) (contact International Studies Office) on official letterhead stating that you are receiving income from scholarships or fellowships subject to tax withholding and information reporting requirements ** A letter from the department at UVa awarding the grant

Please note: Under Exception #2, grant recipients with F, J, M or Q immigration status who are not employed by the University are not required to first apply for an SSN. However, they must submit a letter from the University DSO or RO stating that they will not be securing employment in the U.S. or receiving income from personal services.

Honorarium Payments :

For those individuals claiming a tax treaty benefit for an exemption from taxes on an honorarium payment See Sample Form Check box a and box h on Form W-7. Enter “Exception #2” on line h and indicate treaty country and treaty article number (This can be obtained from UVa Foreign National Tax Office at 434.924.1377 ) In addition you must submit the following with Form W-7: A copy of the completed Form 8233 A letter referencing the payment from an authorized official of the department making the payment A letter or email from a University department requesting your presence for the speaking engagement Complete remainder of Form W-7 and sign

If you are from a non-treaty country and cannot claim an exemption from taxes on an honorarium payment, we will withhold 30% from the gross amount and process the payment. You cannot submit Form W-7 until you file your year-end tax return.

Information Reporting

U.S.-source taxable scholarships and fellowship grants of nonresident aliens are subject to withholding at either a 14% or 30% rate. The income and taxes withheld must be reported on Form 1042-S. Under prior Form W-7 instructions, recipients of such taxable grants had to submit Form 1042-S lacking a TIN with their tax return and ITIN application. The revised W-7 Instructions now allow recipients of such taxable grants to apply for an ITIN prior to submitting their tax return.

Required Documentation (See Form W-7 Supporting Documentation for a complete list of acceptable documents)

ITIN applicants must submit current, unexpired documentation with their Form W-7 that substantiates the identity and foreign status of the applicant, and the information provided on that form. For example, an applicant using their foreign passport to verify identity (box 6d) must list exactly the same information such as name, date of birth, and country of citizenship on Form W-7 as appears on the passport. A valid passport is the only stand-alone document that will prove both identity and foreign status (i.e. if a passport is submitted, then the applicant does not need to submit other supporting documentation). Foreign nationals who do not submit a valid passport must provide at least two or more of the 13 approved documents listed on Form W-7 instructions that are current and that verify identity with a name and photograph, and support the individual’s claim of foreign status.

Form W-7 instructions allow the individual to submit copies of original documents if the copies are: Certified by the issuing agency or official custodian of the original record, or Notarized by a U.S. or Foreign notary public, legally authorized within his or her jurisdiction to certify that the document is a true copy of the original. To notarize the document, the notary must see the valid, unaltered original document and verify that the copy conforms to the original. University Human Resources can provide notary services for purposes of W-7 applications.

Where to Send Applications

Individuals should submit Form W-7, with accompanying documentation, to: Internal Revenue Service
ITIN Operation
P.O. Box 149342 Austin, TX 78714-9342

The application process normally takes 6 to 8 weeks for the IRS to notify you in writing of your ITIN. If you do not receive a letter from the IRS within a 10 week period, you may call 1.800.829.1040 to request an update on the status of your application.

Assistance

Please contact University Human Resources-Foreign National Tax Office for assistance regarding any student or research fellow receiving scholarship/fellowship payments, or any foreign national invited to the University for the purposes of engaging in academic activities and for which a department wishes to pay an honorarium.

We can be reached at 434.924.1377 or 434.982.2735.