Every U.S. taxpayer is required to have an identification number used to
submit their U.S. federal and state income tax returns. The IRS requires
U.S. citizens to use the number assigned to them at birth by the U.S.
Social Security Administration for future social security benefits, which
is commonly known as the Social Security Number (SSN). Everyone else must
apply directly with the Internal Revenue Service (IRS) to be assigned
an Individual Taxpayer Identification Number (ITIN). U.S. citizen are
not eligible to request an ITIN. In order for a U.S. citizen to file a
U.S. federal income tax return, he or she must have an SSN.
Please take note that a new rule requires anyone renewing their U.S. passport
to provide an SSN. Given the fact that there are thousands of Americans
living overseas since childhood who never applied for a social security
number, this new rule will result in the effective banishment of U.S.
citizens that have never been assigned an SSN. You cannot enter the U.S.
with an expired passport.
A common scenario with many of our clients is that they are now working
adults with families, and they now wish to relinquish their U.S. citizenship.
If you relinquish your citizenship without being tax compliant, the IRS
can impose the Mark-to-Market Exit Tax on your worldwide assets. This
would immediately subject all built-in gain in worldwide assets to U.S.
taxation, and the IRS will fully utilize the provisions of income tax
treaties to compel foreign tax authorities to enforce any tax assessment
against you. Please keep in mind that this is the same IRS that recently
pierced through Swiss bank secrecy laws and compelled Swiss banks to turn
over records on thousands of Americans. Even the Cayman Islands has become
a signatory to the U.S. Foreign Account Tax Compliance Act (FATCA). Although
there are still a few less desirable jurisdictions remaining where clients
can flout U.S. tax law, the days of playing “hide the ball”
from the IRS are largely over.
Given the fact that the IRS now has an amnesty program that takes all penalties
off the table, it’s time to considering applying for an SSN and
becoming compliant with your U.S. tax filing obligations; even if it’s
just to immediately relinquish your citizenship.
Applying for an SSN as an Adult
The first step to acquiring a U.S. social security number is to fill out
SSA Form SS-5, Social Security Administration Application for a Social
click here. The second step is to submit the application in-person at your local
U.S. embassy or consulate;
click here. You may be required to visit a specific embassy outside of your country
if the local embassy is not properly trained to handle your case;
click here. In cases where travel is required, most our clients have preferred to
simply travel to the U.S. to apply in-person in Washington DC.
You will be required to bring evidence establishing three things: (1) your
age, (2) your identity, and (3) your status as a U.S. citizen. To establish
your age, you can supply a U.S. birth certificate, religious record like
a baptismal certificate, or passport (U.S. or foreign, current or expired).
However, to establish your identity, a birth certificate alone will not
suffice; you will need a U.S. passport (current or expired) or U.S. state-issued
driver’s license or identity card. Alternatively, they will consider
an employee identity card, certified copies of medical records, health
insurance card, school identity card or records, Medicaid card, or U.S.
military identity card. Lastly, to establish your citizenship, a U.S.
passport or U.S. birth certificate is recommend. Alternatively, they will
accept a Consular Report of Birth, Certificate of Citizenship, or Certificate
of Naturalization. Some of these documents can take weeks, if not months,
to acquire, so it’s recommended to acquire the documents before
applying. Also, if the documents are in a foreign language, you will need
to get certified copies before getting an official translation at a local
embassy. You will also be required to submit a letter explaining everything.
Our firm usually handle this entire process. We draft a cover letter with
all documents attached as exhibits in an orderly fashion to make the process
as efficient as possible for the local embassy officials.
Temporary Streamlined Identification Number (TSIN)
Now to the grand finale. How do you submit tax returns pursuant to the
Streamlined Filing Compliance Procedures without an SSN? Based on extensive
discussions with the IRS, our firm prepares a thorough cover letter explaining
everything. The first two exhibits are a copy of the Form SS-5 submitted
and pending approval and a certified copy of your current or expired U.S.
passport. The IRS will then issue what we refer to as a “temporary
streamlined identification number” pending approval of the Form SS-5.
Cases filed pursuant to the Streamlined Filing Compliance Procedures may
not be filed electronically. Also, payments cannot be made electronically.
You must submit the tax returns along with non-willful certification and
payment to the following address:
Internal Revenue Service
3651 South I-H 35
Stop 6063 AUSC
Attn: Streamlined Foreign Offshore
Austin, TX 78741
Payments for any tax and interest due must be made by check. On the check,
you must include your full legal name, passport number, and the phrase
“Streamlined Offshore” and the three tax years being submitted,
such as “TYs 2012-2014.”