Articles Posted in ITIN’s

By Michael W. Brooks, Esq.

michael@directsllp.com

The IRS Had Not Been Issuing ITIN’s for Months, But Just Now, in Late July 2020, the IRS Has Finally Resumed Issuing ITIN’s

By Michael W. Brooks, Esq.

michael@directsllp.com

Following up on our previous posts earlier this year, where we informed you the IRS employees in offices throughout the United States left those offices in late March, due to concerns about the virus (and stopped processing any foreign seller tax returns and paper tax returns for US taxpayers as well), we can tell you three and one-half months later that the IRS employees who process foreign seller issues and paper tax return refunds have still not returned to their offices to continue this work. While there have been numerous news reports about the IRS employees returning to their offices in June (and those reports were true in terms of answering phone calls and general operations), in terms of processing any paper tax returns (and issuing any refunds associated with such returns) and performing any function for foreign sellers of US real estate (we’ll go over those below), the IRS has not returned to work, and there appears to be no end in sight as to when they will actually return to their jobs (although just on July 7 we did receive an email from the IRS about the resumption of ITIN services). Detailed below is what we know, and at the end our thoughts on how realtors and escrow officers should address this big (and growing bigger) problem.

Coronavirus safety concerns at IRS refund processing offices has forced the IRS to limit the amount of employees at the offices it dedicates to processing  taxpayer refunds.  The IRS is taking several steps due to the fears and concerns of its employees regarding the coronavirus outbreak, including eliminating in-person visits at taxpayer assistance centers and cutting the staff numbers at return processing centers by 50%.  This cut in “on site” personnel was a response to requests by the IRS employees, who have become concerned about working in such close proximity to other employees (apparently a typical IRS processing center has employee cubicles jammed next to each other).  Further updates have suggested the IRS is trying to adjust to allow its employees to work from home as much as possible.

In addition, speaking on the phone with IRS representatives is not currently possible as the IRS has temporarily suspended phone communications.  This includes IRS representatives at the ITIN center in Austin, Texas, and IRS representatives (some of whom we at DIRECTS have gotten to know fairly well) at the IRS FIRPTA Unit in Ogden, Utah.  Both facilities appear to be continuing to operate, although likely with less speed and efficiency because of the on-site employee limitations.

What Will These Changes Mean in Terms of Waiting Times for the Sizable Non-US Seller of US Real Estate Tax Refunds?

By Michael W. Brooks, Esq.

At DIRECTS, all we do is deal with foreign seller (of US real estate) withholding tax issues (all day, every day).  Here are some observations from 2019….

IRS Issuing ITIN’s for Foreign Sellers of US Real Estate in Around Six to Eight Weeks in 2019

By Michael W. Brooks, Esq. (President DIRECTS)

In January 2017, the IRS suspended the right of privately licensed tax professionals and companies (such as my firm- DIRECTS) to certify non-US passports, which slowed down significantly the time it took for a non-US person who sold US real estate to obtain an ITIN (an Individual Taxpayer ID Number)  in connection with their real estate sale, and therefore slowed down significantly the time it took for non-US persons to obtain a refund of the mandatory (up-front at the time of sale of US real estate) IRS withholding tax. By the end of 2017, the IRS had reinstated the right to private certifying acceptance agents to certify passports, but a lot of damage had already been done.

Recall the Basic Rules of FIRPTA, and What the Goal of the Foreign Seller is with Respect to FIRPTA- Get the Big Refund!

At DIRECTS (Domestic and International Real Estate Closing Services), we help 100’s of non-US sellers of US real estate obtain their US Individual Taxpayer ID Numbers (ITIN’s) each year. The ITIN procurement process is critical for foreign sellers of US real estate. If they do not successfully obtain an ITIN, they will never obtain a refund of the large 15% of the gross sales price withholding tax withheld from them at sale (which is entirely refundable if they did not make a large gain on their sale of US real estate).  The ITIN procurement rules have recently undergone significant change (although they have returned, more or less, to where they were before the changes mandated by Congress in January 2017).

Q1) What Were the Changes to the ITIN Program?

A1) Effective January 1, 2017, certifying acceptance agents (private tax professionals who are approved by the IRS) (“CAA’s”) were no longer permitted to certify the passports of non-US sellers of US real estate. This became a huge problem for foreign sellers of US real estate, who need ITIN’s to obtain refunds of their IRS and withholding taxes.

Contact Information