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FAQ on IRS e-file and ITINs
Q. What is the policy change for e-filed returns and how does
it affect taxpayers with Individual Taxpayer Identification
Numbers?
A. The change covers tax returns with an Individual Taxpayer
Identification Number that is different from the Social Security
Number on the taxpayer’s W-2. In the past, these returns could only
be filed on paper. The IRS e-file system has been changed to
allow ITIN returns to be filed showing wages reported to a Social
Security number that is different from the ITIN.
The taxpayer's correct ITIN should be used as the identifying
number at the top of Form 1040. When inputting wage data, the
mismatched SSN should be entered exactly as shown on the Form W-2
issued by the employer. It is now possible to do so when e-filing a
return with an ITIN/SSN mismatch.
Q. Has this changed the W-7 application process?
A. No. The process for submitting Form W-7, Application for an
IRS Individual Taxpayer Identification Number, is the same as
before. This is a change to the IRS e-file system as it
relates to tax returns filed by individuals who already have an
ITIN.
Q. Why the change?
A. An e-file error code was designed to reject returns filed with
typographical errors, but the unintended consequence was that
returns were rejected because of ITIN/SSN mismatches. The IRS has
changed the programming to ensure that these returns will not be
stopped, and transcription errors can still be caught. The change
means that ITIN returns with an ITIN/SSN mismatch can be e-filed.
This change will help ensure that tax information is being captured
in the most efficient manner possible.
Q. Does this cover other mismatches (for example Form
1099-R)?
A. No. The programming change is only for inputting Forms W-2
with a Social Security number different from the primary or
secondary ITIN.
Q. Will the W-2 wages be credited to the ITIN holder? How will
this affect the person whose SSN is being used?
A. The wages are reported as being earned by the ITIN holder, and
are taxable to the ITIN holder. The change will make it easier for
IRS systems to associate the wages with the ITIN holder. This will
stop the IRS from sending a notice to the person whose SSN is being
used and eliminates the need for that person to prove that they did
not earn the wages.
Q. Isn’t it illegal for people to use the SSN of another
person when filing a federal tax return?
A.. Yes, but regardless of how the income was earned, the
Internal Revenue Code states the person who received the taxable
income is required to file a federal tax return and report it.
Individuals with ITIN/SSN mismatches on their tax returns have
always been required to file - this change just makes it possible to
file the return using the IRS e-file system.
Q. Will these returns be processed in the same amount of time
as other e-filed tax returns?
A. Yes, all e-filed tax returns are processed the same.
Q. Will all States with a filing requirement accept ITIN tax
returns?
A. The states are in the process of being contacted to confirm
their policies.
Q. Does the ITIN tax return have to be filed
electronically?
A. No, the ITIN tax return can be filed electronically or on
paper.
Q. Why do I have to override the employee’s SSN in
TaxWise®?
A. Universal Tax Systems did not want to remove the automatic
calculation from line “d” on the W-2 in TaxWise because it would
mean the return preparer would need to enter each SSN on all W-2s,
for all returns. This reduces the risk of error when entering the
SSN on the W-2 and reduces burden on return preparers since this
change affects a small percentage of electronically prepared
returns. | 
