Taxpayer Identifying Numbers (TIN)

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[INTL-0024-94]

RIN 1545-AS83

Taxpayer Identifying Numbers (TIN)

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Withdrawal of notice of proposed rulemaking; Notice of proposed

rulemaking and notice of public hearing.

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SUMMARY: This document withdraws the notice of proposed rulemaking

relating to taxpayer identifying numbers published in the Federal

Register on September 27, 1990, at 55 FR 39486. This document also

contains proposed amendments to the regulations relating to

requirements for furnishing a taxpayer identifying number on returns,

statements, or other documents. These amendments set forth procedures

for requesting a taxpayer identifying number for certain alien

individuals for whom a social security number is not available. These

numbers would be called ``IRS individual taxpayer identification

numbers.'' These amendments also require certain foreign persons to

furnish a taxpayer identifying number on their tax returns. This

document also provides notice of a public hearing on these proposed

regulations.

DATES: Written comments and outlines of the oral comments to be

presented at the public hearing scheduled for 10 a.m. on September 28,

1995, must be received by September 7, 1995.

ADDRESSES: Send submissions to: CC:DOM:CORP:T:R (INTL-0024-94), room

5228, Internal Revenue Service, POB 7604, Ben Franklin Station,

Washington, DC 20044. In the alternative, submissions may be hand

delivered between the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:T:R

(INTL-0024-94), Courier's Desk, Internal Revenue Service, 1111

Constitution Avenue NW., Washington, DC. The public hearing will be

held in the Internal Revenue Service Auditorium, 7400 corridor, 1111

[[Page 30212]] Constitution Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Lilo A.

Hester (202) 874-1490; concerning submissions and the hearing,

Christina Vasquez (202) 622-7180 (not a toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information contained in this notice of proposed

rulemaking has been submitted to the Office of Management and Budget

for review in accordance with the Paperwork Reduction Act (44 U.S.C.

3504(h)). Comments on the collection of information should be sent to

the Office of Management and Budget, Attn: Desk Officer for the

Department of the Treasury, Office of Information and Regulatory

Affairs, Washington, DC 20503, with copies to the Internal Revenue

Service, Attn: IRS Reports Clearance Officer, PC:FP, Washington, DC

20224.

The collection of information from certain resident alien

individuals and foreign persons required to furnish taxpayer

identifying numbers under section 6109 of the Internal Revenue Code

(Code) is found in Sec. 301.6109-1. This information will be used by

the IRS for tax administration purposes. The likely respondents and

recordkeepers are certain resident alien individuals and foreign

persons such as nonresident alien individuals and foreign corporations

who make a return of tax.

The burden for the collection of information contained in

Sec. 301.6109-1(d) is reflected in the burden of Form W-7.

Background

This document withdraws the notice of proposed rulemaking under

section 6109 published in the Federal Register on September 27, 1990 at

55 FR 39486. This document also contains proposed amendments to 26 CFR

part 301 to provide rules under section 6109 of the Internal Revenue

Code relating to a new type of taxpayer identifying number.

Explanation of Provisions

In General

Section 6109(a) of the Code provides that, when required by

regulations, a person must furnish a taxpayer identifying number (TIN)

for securing proper identification of that person on any return,

statement, or other document made under the Code. The assignment of a

unique and permanent number to each taxpayer is important for the

effective operation of the IRS automatic data processing system. The

numbering system improves the IRS' ability to identify and access

database records; to match information provided on tax and information

returns, statements, and other documents with the proper taxpayers; and

to provide better customer service to taxpayers.

The Treasury Department and the IRS are concerned about individuals

who are filing tax returns but who are unable to obtain a social

security number. In order to insure that all taxpayers required to

provide a TIN for tax purposes are able to obtain one, the IRS is

developing a separate numbering system that will make unique and

permanent numbers available to those individuals. The proposed

regulations explain how alien individuals, whether resident or

nonresident, can obtain an IRS individual taxpayer identification

number from the IRS.

The regulations require any foreign person who makes a return to

provide a TIN on the return. This TIN may be an employer identification

number, a social security number, or a new IRS individual taxpayer

identification number in the case of an alien individual who does not

have a social security number and cannot obtain one.

The Treasury Department and the IRS are also considering changes to

the procedures that apply to withholding tax on payments to foreign

persons in order to encourage compliance and reduce paperwork burden.

The Treasury Department and the IRS are aware that significant changes

in this area will impact some aspects of transactions subject to

withholding. Accordingly, the Treasury Department and the IRS intend to

move very cautiously, particularly by considering the possible effect

of changes in these procedures on investment decisions by foreign

persons and by considering the adequacy of existing procedures for

those taxpayers who wish to continue to comply with current rules.

Generally, no new procedures will be adopted without adequate

opportunity for public comment and appropriate transition periods

before taking effect. This will not, however, preclude the Treasury

Department and the IRS from adopting new procedures to replace the

current address rule for dividends.

Specific Changes

The most significant changes proposed by these regulations are

described below. The first change is the introduction of a new IRS-

issued TIN for use by alien individuals who currently do not have, and

are not eligible to obtain, social security numbers. The number is

called an IRS individual taxpayer identification number (ITIN). This

number is intended to be issued to alien individuals, whether resident

or nonresident, who are currently required to furnish a number for tax

purposes but who are not entitled to obtain social security numbers.

Therefore, these amendments are designed to help taxpayers maintain

compliance with TIN requirements under the Code and regulations. The

Social Security Administration limits its assignment of social security

numbers to individuals who are U.S. citizens and alien individuals

legally admitted to the United States for permanent residence or under

other immigration categories which authorize U.S. employment.

Therefore, IRS-issued numbers are necessary for those individuals who

need a TIN but cannot qualify for a social security number.

The second change is to modify the existing rule set forth in

Sec. 301.6109-1(g) that currently excludes from the general requirement

of providing a TIN, foreign persons that do not have either (1) income

effectively connected with the conduct of a U.S. trade or business or

(2) a U.S. office or place of business or a U.S. fiscal or paying

agent. Under the proposed regulations, the exclusion is modified to

require that any foreign person who makes a return of tax furnish its

TIN on that return. This change is intended solely to address the IRS'

and Treasury's concern that, without TINs, taxpayers cannot be

identified and tax returns cannot be processed effectively.

The Treasury Department and the IRS are giving added thought to

applying the TIN requirement to facilitate changes to the procedures

that apply to withholding taxes on payments to foreign persons.

Decisions with respect to the withholding tax system have yet to be

made, and when made, will be proposed in subsequent regulations. The

Treasury Department and the IRS will proceed cautiously in expanding

the scope of the TIN requirement and will consider the adequacy of

existing procedures for those taxpayers who wish to continue to comply

with current rules.

The IRS individual taxpayer identification numbers issued under

this regulation will differ from, and replace, the ``temporary'' TINs

the IRS currently issues under the authority of section 6109(c). For

example, after declaring in Rev. Rul. 84-158, 1984-2 C.B. 262, that a

partnership must request the social security numbers of its individual

partners (including a nonresident alien limited partner), the IRS

announced in Rev. Rul. 85-61, 1985-1 C.B. 355, that it would issue

[[Page 30213]] temporary numbers to nonresident alien limited partners

who do not have, and cannot obtain, social security numbers. All of

these temporary numbers, however, will be retired upon subsequent

revocation of these revenue rulings.

IRS individual taxpayer identification numbers are intended for tax

use only. For example, the numbers will create no inference regarding

the immigration status of a foreign person or the right of that person

to be legally employed in the United States. The IRS individual

taxpayer identification numbers and the information obtained by the IRS

as a result of issuing numbers constitute confidential taxpayer

information. Section 6103 strictly prohibits the disclosure of this

information to other government agencies, private entities, or

citizens. Disclosure in violation of the restrictions under section

6103 may lead to civil or criminal penalties.

Section-by-Section Analysis

Proposed Sec. 301.6109-1(a)(1)(i) provides a general description of

the types of TINs, including the new IRS individual taxpayer

identification number. The IRS individual taxpayer identification

number will begin with a specific number designated by the IRS and will

otherwise resemble a social security number. Proposed Sec. 301.6109-

1(a)(1)(ii) provides general rules for use of the different TINs,

including the rule for an estate to obtain and furnish its employer

identification number when required, such as in its capacity as a payor

or payee of royalties. This rule for estates was announced previously

in the proposed regulations under section 6109 published in the Federal

Register at 55 FR 39486 on September 27, 1990.

The requirement for foreign persons to provide a TIN if they have

income effectively connected with the conduct of a U.S. trade or

business, if they have a U.S. office or place of business, or a U.S.

fiscal or paying agent during the taxable year, or if they are treated

as resident alien individuals under section 6013(g) or (h), is restated

without change in proposed Secs. 301.6109-1(b)(2) and (c). However,

proposed Sec. 301.6109-1(b)(2)(iv) modifies the exclusion currently

provided in Sec. 301.6109-1(g) with respect to other foreign persons by

providing that a foreign person filing a return of tax is subject to

the TIN requirements under section 6109. For this purpose, a return of

tax includes income, estate, and gift tax returns but excludes

information returns, statements or other documents. This requirement is

proposed to be effective for foreign persons who file returns of tax

after December 31, 1995.

The provisions of Sec. 301.6109-1(d)(2) dealing with obtaining an

employer identification number are unchanged except to specify that a

Form SS-4 will be available from U.S. consular offices abroad. This

change is intended to accommodate those foreign persons that are

required to provide an employer identification number.

The procedures governing the new IRS individual taxpayer

identification number, including procedures for obtaining such a

number, are set forth in proposed Sec. 301.6109-1(d)(3). An IRS

individual taxpayer identification number is applied for on Form W-7,

Application for IRS Individual Taxpayer Identification Number. Under

normal procedures, the application is submitted to the IRS for

processing together with required documentation designed to

substantiate foreign status, as well as true identity. Further guidance

will be issued to specify the types of acceptable documentation.

Because the IRS intends to rely as much as possible on the identifying

documents that are customarily used in a foreign jurisdiction to

identify a resident in that jurisdiction, the documentation

requirements are likely to vary from country to country. Comments and

suggestions are solicited regarding the type of documents that could be

used reliably to establish the identity of taxpayers and their foreign

status.

The IRS is planning a wide distribution of application forms in the

United States and abroad and will insure that the form is easily

available to the public. Further, in order to facilitate the

application process and to expedite the issuance of the TINs, the

regulations propose to authorize agreements that would permit certain

persons to act as an applicant's agent. These agents are called

acceptance agents. Generally, an acceptance agent may include financial

institutions or educational institutions, i.e., institutions that are

likely to come in contact with a large number of foreign taxpayers

earning U.S. source income and that can establish to the IRS that they

have the resources and procedures necessary to undertake the duties

expected from an acceptance agent.

Under an agreement with the IRS, an acceptance agent would assume

responsibility for providing the necessary information to the IRS for

the issuance of a number, together with a certification that the

applicant is a foreign person. The certification would be issued on the

basis of prescribed documentation obtained from the applicant. Under

this procedure, no documentation generally would be required to be

furnished to the IRS, except as part of a verification process by which

the IRS may periodically verify the agent's compliance with the

agreement. In order to streamline the process and facilitate the

agent's due diligence under the agreement, the agreement would specify

the type of documentation that must be obtained to verify foreign

status and true identity of an applicant.

Proposed Sec. 301.6109-1(d)(4) provides rules for the coordination

of the different TINs. A person entitled to a social security number

will not be issued an IRS individual taxpayer identification number.

Once a person has a social security number, that number must be used

for all tax purposes, even though the person is a nonresident alien. A

nonresident alien who is issued an IRS individual taxpayer

identification number and later becomes entitled to a social security

number (e.g., becomes a U.S. resident under an immigration visa) must

apply for a social security number and must stop using the IRS number.

IRS matching systems will help the IRS detect taxpayers who are

incorrectly using an IRS individual taxpayer identification number. The

IRS will contact those individuals and request that they obtain a

social security number.

Section 301.6109-1(f) is modified to cross reference the new

penalty provisions under sections 6721 through 6724.

Proposed Sec. 301.6109-1(g)(1) provides the general rule that, in

the IRS records, a person with a social security number or an employer

identification number will normally be identified as a U.S. person.

Regulations to be issued at a later time may make it important for a

person to be identified correctly in the IRS records as a U.S. or a

foreign person. Accordingly, these proposed regulations provide that

the foreign person with a social security number or an employer

identification number may establish foreign status with the IRS. Any

foreign person that holds an employer identification number issued

prior to the effective date of this proposed regulation may continue to

use its employer identification number for tax purposes. However, when

requested by the IRS, such persons must apply for a new employer

identification number that is exclusively dedicated to foreign persons.

Proposed Sec. 301.6109-1(g)(1) also provides that an IRS individual

taxpayer identification number is considered by the IRS to belong to a

nonresident alien individual if the foreign status of the individual is

established upon initial application for the number. If foreign status

is not [[Page 30214]] established, the IRS will generally require the

individual to apply for a social security number. In rare cases when a

resident alien individual is not eligible for a social security number,

the taxpayer will be entitled to use an IRS individual taxpayer

identification number, and the IRS will note in its records that the

number belongs to a U.S. person.

No re-filings are required in order to maintain foreign status

described in proposed Sec. 301.6109-1(g)(1). However, proposed

Sec. 301.6109-1(g)(2) provides that if circumstances change (for

example, a taxpayer becomes a U.S. resident), then the taxpayer must

notify the IRS to record the change of status. The IRS will issue

guidance on procedures for notifying the IRS of a person's status or

changes thereof.

Proposed Sec. 301.6109-1(g)(3) concerns disclosure provisions. In

order to make the acceptance agent's procedures possible, it is

necessary that taxpayers requesting a TIN through an acceptance agent

authorize the disclosure of taxpayer information to the extent

necessary to allow communications between the IRS and the acceptance

agent in the course of the issuance and administration of the number.

Accordingly, the application form will include a waiver of the

prohibition against disclosure of taxpayer information in order to

permit the IRS to communicate with an acceptance agent regarding

matters related to the assignment of a TIN.

Proposed Effective Date

These regulations would apply to returns, statements, or documents

filed after December 31, 1995, except the provision relating to the

requirement for an estate to obtain an employer identification number

applies on and after January 1, 1984. Thus, these regulations would

apply to foreign persons described in proposed Sec. 301.6109-

1(b)(2)(iv) who file a return of tax after December 31, 1995.

Special Analyses

It has been determined that this notice of proposed rulemaking is

not a significant regulatory action as defined in EO 12866. Therefore,

a regulatory assessment is not required. It also has been determined

that section 553(b) of the Administrative Procedure Act (5 U.S.C.

chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do

not apply to these regulations, and, therefore, a Regulatory

Flexibility Analysis is not required. Pursuant to section 7805(f) of

the Internal Revenue Code, this notice of proposed rulemaking will be

submitted to the Chief Counsel for Advocacy of the Small Business

Administration for comment on its impact on small business.

Comments and Public Hearing

Before these proposed regulations are adopted as final regulations,

consideration will be given to any written comments that are submitted

timely (preferably a signed original and eight (8) copies) to the IRS.

All comments will be available for public inspection and copying.

A public hearing has been scheduled for 10 a.m. on September 28,

1995. Because of access restrictions, visitors will not be admitted

beyond the Internal Revenue Building lobby more than 15 minutes before

the hearing starts.

The rules of 26 CFR 601.601(a)(3) apply to the hearing.

Persons that wish to present oral comments at the hearing must

submit written comments and an outline of the topics to be discussed

and the time to be devoted to each topic by September 7, 1995.

A period of 10 minutes will be allotted to each person for making

comments.

An agenda showing the scheduling of the speakers will be prepared

after the deadline for receiving outlines has passed. Copies of the

agenda will be available free of charge at the hearing.

Drafting Information

The principal author of these proposed regulations is Lilo A.

Hester of the Office of Associate Chief Counsel (International), within

the Office of Chief Counsel, IRS. However, other personnel from the IRS

and Treasury Department participated in their development.

Withdrawal of Proposed Regulations

The previously proposed regulations under Sec. 301.6109-1, as

published in the Federal Register on September 27, 1990, at 55 FR

39486, are hereby withdrawn.

List of Subjects in 26 CFR Part 301

Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income

taxes, Penalties, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

Accordingly, 26 CFR part 301 is proposed to be amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

Paragraph 1. The authority citation for part 301 is amended by

adding an entry in numerical order to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Section 301.6109-1 also issued under 26 U.S.C. 6109(a), (c), and

(d). * * *

Par. 2. Section Sec. 301.6109-1 is amended as follows:

1. Paragraphs (a)(1), (b), (c), and (d)(2) are revised.

2. Paragraphs (d)(3) and (4) are added.

3. Paragraphs (f), (g), and (h) are revised.

The revisions and additions read as follows:

Sec. 301.6109-1 Identifying numbers.

(a) In general--(1) Taxpayer identifying numbers--(i) Types. There

are generally three types of taxpayer identifying numbers: social

security numbers, Internal Revenue Service (IRS) individual taxpayer

identification numbers, and employer identification numbers. Social

security numbers take the form 000-00-0000, IRS individual taxpayer

identification numbers take the form 000-00-0000 but begin with a

specific number designated by the IRS, and employer identification

numbers take the form 00-0000000. Both social security numbers and IRS

individual taxpayer identification numbers identify individual persons.

For the definition of social security number and employer

identification number, see Secs. 301.7701-11 and 301.7701-12,

respectively. For the definition of IRS individual taxpayer

identification number, see paragraph (d)(3) of this section.

(ii) Uses. Except as otherwise provided in applicable regulations

under this title or on a return, statement, or other document, and

related instructions, taxpayer identifying numbers must be used as

follows:

(A) Except as otherwise provided in paragraphs (a)(1)(ii)(B) and

(D) of this section, an individual required to furnish a taxpayer

identifying number must use a social security number.

(B) Except as otherwise provided in paragraph (a)(1)(ii)(D) of this

section, an individual required to furnish a taxpayer identifying

number but who is not eligible to obtain a social security number, must

use an IRS individual taxpayer identification number.

(C) Any person other than an individual (such as corporations,

partnerships, nonprofit associations, trusts, estates, and similar

nonindividual persons) that is required to furnish a taxpayer

identifying number must use an employer identification number.

(D) An individual, whether U.S. or foreign, who is an employer or

who is engaged in trade or business as a sole proprietor should use an

employer identification number as required by [[Page 30215]] returns,

statements, or other documents and their related instructions.

* * * * *

(b) Requirement to furnish one's own number--(1) U.S. persons.

Every U.S. person who makes under this title a return, statement, or

other document must furnish its own taxpayer identifying number as

required by the forms and the accompanying instructions. A U.S. person

whose number must be included on a document filed by another person

must give the taxpayer identifying number so required to the other

person on request. For penalties for failure to supply taxpayer

identifying numbers, see sections 6721 through 6724. For provisions

dealing specifically with the duty of employees with respect to their

social security numbers, see Sec. 31.6011(b)-2 (a) and (b) of this

chapter (Employment Tax Regulations). For provisions dealing

specifically with the duty of employers with respect to employer

identification numbers, see Sec. 31.6011(b)-1 of this chapter

(Employment Tax Regulations).

(2) Foreign persons. The provisions of paragraph (b)(1) of this

section regarding the furnishing of one's own number shall apply to the

following foreign persons--

(i) A foreign person that 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 that 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 as a resident under section

6013(g) or (h); and

(iv) Any other foreign person who makes a return of tax under this

title (including income, estate, and gift tax returns) but excluding

information returns, statements, or documents.

(c) Requirement to furnish another's number. Every person required

under this title to make a return, statement, or other document must

furnish such taxpayer identifying numbers of other U.S. persons and

foreign persons that are described in paragraph

(b)(2) (i), (ii), or (iii) of this section as required by the forms

and the accompanying instructions. If the person making the return,

statement, or other document does not know the taxpayer identifying

number of the other person, such person must request the other person's

number. A request should state that the identifying number is required

to be furnished under authority of law. When the person making the

return, statement, or other document does not know the number of the

other person, and has complied with the request provision of this

paragraph, such person must sign an affidavit on the transmittal

document forwarding such returns, statements, or other documents to the

Internal Revenue Service, so stating. A person required to file a

taxpayer identifying number shall correct any errors in such filing

when such person's attention has been drawn to them.

(d) * * *

(2) Employer identification number. Any person required to furnish

an employer identification number must apply for one, if not done so

previously, on Form SS-4. A Form SS-4 may be obtained from any office

of the Internal Revenue Service, U.S. consular office abroad, or from

an acceptance agent described in paragraph (d)(3)(iv) of this section.

The person must make such application in advance of the first required

use of the employer identification number to permit issuance of the

number in time for compliance with such requirement. The form, together

with any supplementary statement, must be prepared and filed in

accordance with the form, accompanying instructions, and relevant

regulations, and must set forth fully and clearly the requested data.

(3) IRS individual taxpayer identification number--(i) Definition.

The term IRS individual taxpayer identification number means a taxpayer

identifying number issued to an alien individual by the Internal

Revenue Service, upon application, for use in connection with filing

requirements under this title. The term IRS individual taxpayer

identification number does not refer to a social security number or an

account number for use in employment for wages. For purposes of this

section, the term alien individual means an individual who is not a

citizen or national of the United States.

(ii) General rule for obtaining number. Any individual who is not

eligible to obtain a social security number and is required to furnish

a taxpayer identifying number must apply for an IRS individual taxpayer

identification number on Form W-7, Application for IRS Individual

Taxpayer Identification Number, or such other form as may be prescribed

by the Internal Revenue Service. Form W-7 may be obtained from any

office of the Internal Revenue Service, U.S. consular office abroad, or

any acceptance agent described in paragraph (d)(3)(iv) of this section.

The individual shall furnish the information required by the form and

accompanying instructions, including the individual's name, address,

foreign tax identification number (if any), and specific reason for

obtaining an IRS individual taxpayer identification number. The

individual must make such application in advance of the first required

use of the IRS individual taxpayer identification number to permit

issuance of the number in time for compliance with such requirement.

The application form, together with any supplementary statement and

documentation, must be prepared and filed in accordance with the form,

accompanying instructions, and relevant regulations, and must set forth

fully and clearly the requested data.

(iii) General rule for assigning number. Under procedures issued by

the Internal Revenue Service, an IRS individual taxpayer identification

number will be assigned to an individual upon the basis of information

reported on Form W-7 (or such other form as may be prescribed by the

Internal Revenue Service) and any such accompanying documentation that

may be required by the Internal Revenue Service. An applicant for an

IRS individual taxpayer identification number must submit such

documentary evidence as the Internal Revenue Service may prescribe in

order to establish alien status and identity. Examples of acceptable

documentary evidence for this purpose may include items such as an

original (or a certified copy of the original) passport, driver's

license, birth certificate, identity card, or U.S. visa.

(iv) Acceptance agents--(A) Agreements with acceptance agents. A

person described in paragraph (d)(3)(iv)(B) of this section will be

accepted by the Internal Revenue Service to act as an acceptance agent

for purposes of the regulations under this section upon entering into

an agreement with the Internal Revenue Service, under which the

acceptance agent will be authorized to act on behalf of taxpayers

seeking to obtain a taxpayer identifying number from the Internal

Revenue Service. The agreement must contain such terms and conditions

as are necessary to insure proper administration of the process by

which the Internal Revenue Service issues taxpayer identifying numbers

to foreign persons, including proof of their identity and foreign

status. In particular, the agreement may contain--

(1) Procedures for providing Form SS-4 and Form W-7, or such other

necessary form to applicants for obtaining a taxpayer identifying

number;

(2) Procedures for providing assistance to applicants in completing

[[Page 30216]] the application form or completing it for them;

(3) Procedures for collecting, reviewing, and maintaining, in the

normal course of business, a record of the required documentation for

assignment of a taxpayer identifying number;

(4) Procedures for submitting the application form and required

documentation to the Internal Revenue Service, or if permitted under

the agreement, submitting the application form together with a

certification that the acceptance agent has reviewed the required

documentation and that it has no actual knowledge or reason to know

that the documentation is not complete or accurate;

(5) Procedures for assisting taxpayers with notification procedures

described in paragraph (g)(2) of this section in the event of change of

foreign status;

(6) Procedures for making all documentation or other records

furnished by persons applying for a taxpayer identifying number

promptly available for review by the Internal Revenue Service, upon

request; and

(7) Provisions that the agreement may be terminated in the event of

a material failure to comply with the agreement, including failure to

exercise due diligence under the agreement.

(B) Persons who may be acceptance agents. An acceptance agent may

include any financial institution as defined in section 265(b)(5) or

Sec. 1.165-12(c)(1)(v) of this chapter, any college or university that

is an educational organization as defined in Sec. 1.501(c)(3)-

1(d)(3)(i) of this chapter, any federal agency as defined in section

6402(f) or any other person or categories of persons that may be

authorized by regulations or Internal Revenue Service procedures. A

person described in this paragraph (d)(3)(iv)(B) that seeks to qualify

as an acceptance agent must have an employer identification number for

use in any communication with the Internal Revenue Service. In

addition, it must establish to the satisfaction of the Internal Revenue

Service that it has adequate resources and procedures in place to

comply with the terms of the agreement described in paragraph

(d)(3)(iv)(A) of this section.

(4) Coordination of taxpayer identifying numbers--(i) Social

security number. Any individual who is duly assigned a social security

number or who is entitled to a social security number will not be

issued an IRS individual taxpayer identification number. The individual

can use the social security number for all tax purposes under this

title, even though the individual is, or later becomes, a nonresident

alien individual. Further, any individual who has an application

pending with the Social Security Administration will be issued an IRS

individual taxpayer identification number only after the Social

Security Administration has notified the individual that a social

security number cannot be issued. Any alien individual duly issued an

IRS individual taxpayer identification number who later becomes a U.S.

citizen, or an alien lawfully permitted to enter the United States

either for permanent residence or under authority of law permitting

U.S. employment, will be required to obtain a social security number.

Any individual who has an IRS individual taxpayer identification number

and a social security number, due to the circumstances described in the

preceding sentence, must notify the Internal Revenue Service of the

acquisition of the social security number and must use the newly-issued

social security number as the taxpayer identifying number on all future

returns, statements, or other documents filed under this title.

(ii) Employer identification number. Any individual with both a

social security number (or an IRS individual taxpayer identification

number) and an employer identification number may use the social

security number (or the IRS individual taxpayer identification number)

for individual taxes, and the employer identification number for

business taxes as required by returns, statements, and other documents

and their related instructions. Any alien individual duly assigned an

IRS individual taxpayer identification number who also is required to

obtain an employer identification number must furnish the previously-

assigned IRS individual taxpayer identification number to the Internal

Revenue Service on Form SS-4 at the time of application for the

employer identification number. Similarly, where an alien individual

has an employer tax identification number and is required to obtain an

IRS individual taxpayer identification number, the individual must

furnish the previously-assigned employer identification number to the

Internal Revenue Service on Form W-7, or such other form as may be

prescribed by the Internal Revenue Service, at the time of application

for the IRS individual taxpayer identification number.

* * * * *

(f) Penalty. For penalties for failure to supply taxpayer

identifying numbers, see sections 6721 through 6724.

(g) Special rules for taxpayer identifying numbers issued to

foreign persons--(1) General rule--(i) Social security number. A social

security number is generally identified in the records and database of

the Internal Revenue Service as a number belonging to a U.S. citizen or

resident alien individual. A person may establish a different status

for the number by providing proof of foreign status with the Internal

Revenue Service under such procedures as the Internal Revenue Service

shall prescribe, including the use of a form as the Internal Revenue

Service may specify. Upon accepting an individual as a nonresident

alien individual, the Internal Revenue Service will assign this status

to the individual's social security number.

(ii) Employer identification number. An employer identification

number is generally identified in the records and database of the

Internal Revenue Service as a number belonging to a U.S. person.

However, the Internal Revenue Service may establish a separate class of

employer identification numbers solely dedicated to foreign persons

which will be identified as such in the records and database of the

Internal Revenue Service. A person may establish a different status for

the number either at the time of application or subsequently by

providing proof of U.S. or foreign status with the Internal Revenue

Service under such procedures as the Internal Revenue Service shall

prescribe, including the use of a form as the Internal Revenue Service

may specify. The Internal Revenue Service may require a person to apply

for the type of employer identification number that reflects the status

of that person as a U.S. or foreign person.

(iii) IRS individual taxpayer identification number. An IRS

individual taxpayer identification number is generally identified in

the records and database of the Internal Revenue Service as a number

belonging to a nonresident alien individual. If the Internal Revenue

Service determines at the time of application or subsequently, that an

individual is not a nonresident alien individual, the Internal Revenue

Service may require that the individual apply for a social security

number. If a social security number is not available, the Internal

Revenue Service may accept that the individual use an IRS individual

taxpayer identification number, which the Internal Revenue Service will

identify as a number belonging to a U.S. resident alien.

(2) Change of foreign status. Once a taxpayer identifying number is

identified in the records and database of the Internal Revenue Service

as a number belonging to a U.S. or foreign person, the status of the

number is [[Page 30217]] permanent until the circumstances of the

taxpayer change. A taxpayer whose status changes (for example, a

nonresident alien individual with a social security number becomes a

U.S. resident alien) must notify the Internal Revenue Service of the

change of status under such procedures as the Internal Revenue Service

shall prescribe, including the use of a form as the Internal Revenue

Service may specify.

(3) Waiver of prohibition to disclose taxpayer information when

acceptance agent acts. As part of its request for an IRS individual

taxpayer identification number or submission of proof of foreign status

with respect to any taxpayer identifying number, where the foreign

person acts through an acceptance agent, the foreign person will agree

to waive the limitations in section 6103 regarding the disclosure of

certain taxpayer information. However, the waiver will apply only for

purposes of permitting the Internal Revenue Service and the acceptance

agent to communicate with each other regarding matters related to the

assignment of a taxpayer identifying number and change of foreign

status.

(h) Effective date. The provisions of this section generally are

effective for any return, statement, or other document to be filed

after December 31, 1995. However, the provision of paragraph (a)(1)(ii)

of this section that requires an estate to obtain an employer

identification number applies on and after January 1, 1984.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

[FR Doc. 95-13818 Filed 6-7-95; 8:45 am]

BILLING CODE 4830-01-U