The Catholic University of America

Summary of Federal Laws

Tax

Compliance Partners

Director of Payroll

Tax Issues Related to Employment

Taxpayer Identifying Numbers and Requirements to Furnish to the IRS

26 U.S.C. § 6109; 26 C.F.R. §301.6109-1

There are several types of taxpayer identifying numbers (TINs) that include the following:

  • social security numbers (SSNs);
  • individual taxpayer identification numbers (ITINs);
  • adoption taxpayer identification numbers (ATINs);
  • and employer identification numbers (EINs).

SSNs take the form 000-00-0000. ITINs and ATINs take the same form, 000-00-0000, but include a specific number or numbers designated by the IRS. EINs take the form 00-0000000.

SSNs, ITINs, and ATINs are used to identify individual persons. EINs are used to identify employers.

With a few minor exceptions, an individual who is required to file a TIN must use a SSN. An individual who is required to furnish a TIN, but who is not eligible to obtain a SSN, must use an ITIN or an ATIN. An ITIN is generally identified in the records and database of the IRS as a number belonging to a nonresident alien individual. An ATIN is a temporary TIN assigned to child placed for adoption. An entity other than an individual (corporations, partnerships, nonprofit associations, trusts, estates, and similar non-individual persons) that is required to file a TIN, must use an EIN.

Requirement to Furnish One's Own Number

  • Every U.S. person who files a return, statement, or other document under the tax code must furnish a TIN as required by the forms and the accompanying instructions. A U.S. person whose TIN must be included on a document filed by another person must give the TIN so required to the other person on request.

  • The following foreign persons must furnish TINs:

(i) a foreign person who has income effectively connected with the conduct of a U.S. trade or business at any time during the taxable year;

(ii) a foreign person who has a U.S. office or place of business or a U.S. fiscal or paying agent at any time during the taxable year;

(iii) a nonresident alien treated married to a U.S. citizen or resident and filing a joint return;

(iv) a foreign person who files a tax return that involves payment of taxes or a refund claim;

(v) a foreign person making an express election under the code to be classified as a partnership or association; and

(vi) a foreign person who furnishes a withholding certificate. (See 26 CFR § 1.1441-1 et seq.)

Requirement to Furnish Another's Number

Effective January 1, 2001. Every person required under the code to file a return, statement, or other document, must furnish such TINs of other U.S. persons and foreign persons that are described above. If the person making the return, statement, or other document does not know the TIN of the other person, such person must request the other person's TIN. The request should state that the TIN is required to be furnished under authority of law. When the person making the return, statement, or other document does not know the TIN of the other person, and has complied with the request provision, such person must sign an affidavit on the transmittal document forwarding such returns, statements, or other documents to the IRS, so stating. A person required to file a TIN shall correct any errors in such filing when such person's attention has been drawn to them.

Updating of Employer Identification Numbers, 78 Fed. Reg. 26244, May 6, 2013, Final Rule.
Effective May 6, 2013. The final rule requires any person assigned an employer identification number (EIN) to provide updated information to the IRS in a manner and frequency to be required by forms, instructions or other guidance to be issued by the IRS. The information required to be updated will include EIN application information regarding the name and taxpayer identifying number of the responsible party for the EIN holder.

 

See also Tuition Payment Credit Reporting Requirements.

New ITIN Application Procedures IR 2012-98 (11-29-2012)

**ITINs are only issued to foreign nationals who are not eligible for SSNs. In the above announcement, the IRS sets forth new procedures effective Jan. 1, 2013 for the ITIN application process. The IRS web  page on ITINs links to an FAQ and a summary of program changes. Notarized copies of documents will not be accepted, but rather original documentation will be required. See also the IRS fact sheet on changes. Not affected by these changes are non-resident aliens applying for ITINs for claiming tax treaty benefits.

 

 

 

Questions and Answers

 

Q. Does a non-citizen, non-resident of the U.S or a foreign business performing services for a U.S. Taxpayer need an ITIN before being paid?

A. The facts as we discussed them are that the University pays people/corporations located in foreign countries for something. The something may be use of space for an exhibit, or housing students temporarily in the country.

Since ITINs are required only where the recipient of the income is required to file a US income tax return, then no ITIN would be required.They are taxable only on their US source income.  But this income would not be US source income because the services are performed outside the U.S. 

Answer courtesy of Thomas Arden Roha, Tax Counsel, Roha and Flaherty

Note: Where possible the payee should fill out a W-8BENas evidence of foreign status.Otherwise, it is assumed to be a US taxpayer and without a TIN would be subject to backup withholding at 28%. It is also advisable to request the invoice directly state that services were performed outside the US as additional support.

 Resources

 

Vanderbilt University Payment to Businesses Web Page (for International Services)

IRS Publication 901 (has tax treaty list, easy to use)

Reporting U.S. Business Payments to Foreign Individuals For Services Performed Outside the U.S. By KLR, PAs, Nov. 13, 2012.

US. Withholding Agent Frequently Asked Questions

ASU Non-Resident Alient Payment Policy: Clarifies what documents are needed to avoid having taxes withheld when a tax treaty exists.

Introduction to International Tax Issues: Compliance Challenges Increase International Taxpayers' Need for IRS Services and May Undermine the Effectiveness of IRS Enforcement Initiatives in the International Arena

 

CCR updated CFR links 7/7/15