IRS Clarifies Temporary ITIN Application Requirements

Effective Oct. 2, 2012, the IRS implemented two separate clarifying changes to its temporary procedures for issuing Individual Taxpayer Identification Numbers (ITINs).

First, the IRS will allow individuals studying in the United States under the Student Exchange Visitors Program (SEVP) to get ITINs under a streamlined procedure. SEVP participants already provide documentation to the Department of Homeland Security under the requirements of that program, and will need a letter from their educational institution verifying their status.

Second, the IRS is creating special procedures for taxpayers who have an approved Tax Year 2011 extension to file their completed tax returns.

Under these temporary procedures, eligible taxpayers will be allowed to have their original documents certified by a Certifying Acceptance Agent (CAA) or a SEVP approved institution as appropriate rather than mailing originals to the IRS. Extension filers that choose to not submit originals documents or copies certified by the issuing agency, must apply through a CAA and individuals studying under the SEVP will be required to apply through a university, college or other SEVP-approved institution. For both groups, these temporary procedures cover applications for the primary applicant, their spouse and dependents.

Designed specifically for tax-administration purposes, ITINs are only issued to people who are not eligible to obtain a Social Security Number. ITINs assist the IRS with the collection of taxes from foreign nationals, nonresident aliens and others who have filing or payment obligations under U.S. law. The tightened interim guidelines, announced in June, remain in effect for most other noncitizens. More information about ITINs and these interim guidelines can be found at 2012 ITIN Review Frequently Asked Questions.

The temporary procedures apply to these two groups of taxpayers:

  1. Noncitizens that have filed extensions: These are noncitizens who requested an extension of time to file a 2011 federal income tax return for resident and nonresident aliens and choose to not submit originals documents or copies certified by the issuing agency. The ITINs issued under this procedure are temporary, expiring one year from the extended return due date (e.g., Oct. 15, 2013). The noncitizens must submit their W-7 and related identification documents through a CAA, along with Form W-7 and related attachments. See below for special instructions for CAAs.
  2. SEVP Students: These are individuals admitted to the U.S. under an F, J or M visa who receive taxable scholarship, fellowship or other grants reportable by the school on Form W-2 or Form 1042-S. See below for special instructions for SEVP institutions, including a sample certification letter.

As previously announced, the IRS is in the process of conducting a review of its ITIN procedures.  Final rules will be issued before the start of the 2013 filing season.
Related Information:

Additional 2 Month Extension

In addition to the 6-month extension, taxpayers who are out of the country (as defined in he form 4868 instructions) can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). To request this extension, you must send the IRS a letter explaining the reasons why you need the additional 2 months. Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address:

Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215

You will not receive any notification from the IRS unless your request is denied for being untimely.

The discretionary 2-month additional extension is not available to taxpayers who have an approved extension of time to file on Form 2350 (for U.S. citizens and resident aliens abroad who expect to qualify for special tax treatment).

Read more here -

Affordable Healthcare Act & Dutch 30% Ruling

July News Letter

Happy Birthday USA.  Enjoy your holiday but remember to be safe and thank a veteran.

Below is a list of hot tax topics.  We hope you find the information helpful and useful.


This past Thursday, June 28, 2012, the Supreme Court upheld the individual mandate of ObamaCare.  Therefore, we can only hope for a repeal of the law and plan for the individual cost.  While waiting and hoping for a repeal, GEMMS is advising its clients of the two most taxing effects of ObamaCare (1) the new individual tax assessed for health insurance and (2) every US citizen and every individual living or working in the US are now required to file a US tax return.

In order to provide health insurance to everyone in the US, all taxpayers (aka the 51%) are now required to pay $695 per person or $2,085 per family to the US federal government on their annual tax returns.  Although President Obama said several times this was “not a tax,” the Supreme Court has confirmed this is in fact a tax.  If a taxpayer can prove they pay more than the above amounts to US Insurance providers or Medicare, than the above amounts will be reduced accordingly.  For example, a retired US expatriate living in the UK paying UK insurance only, will be required to pay these taxes to the US federal government.

Additionally, GEMMS would like to note that in order for the US government to appropriately collect these funds, every US citizen and every individual that works or lives in the US will now be required to file a US federal tax return.  The individuals that historically never file returns because their income is either under the thresholds or their social security is non-taxable (aka the 49%) will now be required to file a US federal tax return in order to pay their fair share of health insurance.  For example, a non-US citizen that lives outside the US and works in the US for only a couple of days per year will now be required to file a US federal tax return in order to pay into the US Nationalized Health Care System – aka ObamaCare.


Significant changes in the Dutch 30% allowance ruling as of January 1, 2012.

The 30% allowance ruling has changed signifiantly as of January 1, 2012. The most important changes are that the duration of the ruling has been reduced from 10 to 8 years and that the requirements for obtaining the ruling have changed significantly.

In order to qualify for the ruling, an employee must now prove that he has been hired from outside a 150 kilometre radius from the Dutch border (i.e in the 24 months prior to the employment in the Netherlands, the employee must have lived outside the 150 kilometre radius for at least 16 months). Additionally the employee must meet a minimum salary criterion. As a consequence the taxable salary under the 30% allowance ruling (i.e the 70%) must amount to at least Euro 35,000 for 2012. This salary criterion will be indexed annually. For 2012 this means that in order to benefit maximally from the 30% allowance ruling, the salary before application of the ruling (i.e. the 100%) must amount to at least Euro 50,000. Exceptions to the salary criterion however apply for scientific researchers, employees under the age of 30 who have obtained their master at a foreign university during the last 12 months and PHD graduates.

Please note that if the employee has a lower salary than Euro 50,000, this does not automatically mean that the employee is not eligible for the ruling. It is namely possible to reduce the amount of the tax free allowance in such a way that the taxable salary amounts to at least Euro 35,000. If an employee would for example have a salary of Euro 36,000, he can still benefit from the ruling, but his tax free allowance can only amount to Euro 1,000.

Another important change in the ruling is that the ruling ends when the employment in the Netherland ends. The ruling is consequently no longer applicable to all benefits from current employment that are received after the end of the employment. This would apply to bonuses, the benefits deriving from stock based remuneration, equalisation payments but also to the final reconciliation of the holiday allowance, holidays, 13. month etc.

For employees who have already obtained the ruling prior to January 1, 2012, grandfather clauses have been implemented as well. Depending on how long the employee has enjoyed the ruling prior to January 1, 2012, on the basis of these grandfather clauses the employee is allowed to continue the ruling unchanged for either a maximum period of five or ten years.

In case you would like to apply for the 30% allowance ruling for any of your employees, we strongly advice you to seek expert advice on the matter. For questions you can contact Gilianne Nelissen of  Luminous Tax Matters in the Netherland at +31 20 6549600 or

As always please feel free to contact us if you have any problems, questions, or concerns.

Illegals Using ITINs for Child Tax Credits

Attached is a link to an investigative news story out of Indiana.

The story is about how some of our neighbors from the south have figured out how to scam the US Tax system and steal the child tax credits for children that are not even living in the US.

I would argue that the individual that assisted these taxpayers with obtaining the ITIN’s for the non-US children should be sought out and punished as well…

IRS Updates -Foreign Persons Receiving Rental Income From U.S. Real Property

U.S. real estate professionals and rental agents/property managers are encountering an increasing number of situations that involve foreign persons? acquiring U.S. real estate as a part-time residence, for investment or in some cases to conduct a U.S. business.

Read more here -