Thousands of residents are dependent on the use of an Individual Taxpayer Identification Number (ITIN), issued by the IRS, in order to file a federal tax return each year. Major changes to the ITINs will affect the ability for millions of individuals and households to file 2016 federal tax returns and receive returns before February 15. ITIN holders are those not eligible for a Social Security Card but have a filing requirement.
The need for renewal is a result of the Protecting Americans from Tax Hikes (PATH) Act of 2015 passed by Congress and signed into law.
The Protecting Americans from Tax Hikes (PATH) Act of 2015, passed by Congress and signed into law, requires that all taxpayers with an ITIN filing a federal tax return in 2017:
- Must complete a renewal application and have a current ITIN
- Taxpayers with ITINs that have not been used on a federal income tax return in the past three years must renew ITINs or they will not be able to file
- Those ITINs with the middle digits 78 or 79 (xxx-78-xxxx or xxx-79xxxx) must renew their ITIN even if used in the past three years
Those claiming Earned Income Tax Credits (EITC) and/or Additional Child Tax Credit (ACTC)), are affected by PATH. A refund will not be received before February 15 by anyone that claims these tax credits. The delay puts millions of low-income households that depend on these funds in jeopardy. These households depend on refunds to, for example, become current on past due bills, purchase household needs or supplies, or for down payments to move out of uninhabitable housing. The change in the refund timeline affects filers that may to turn to predatory operations that offer high-interest loans to secure funding.
The IRS will use the delay in refunds to verify income reported on those tax returns. Employers are now required to file W-2 forms and 1099s by January 31 instead of March, which was the case in prior years.
SDC is concerned the delay could negatively low-to-mid income residents who rely on the Volunteer Income Tax Assistance (VITA) program, which is already in jeopardy. VITA provides free tax preparation for households with an annual income of $56,000 or less.
SDC has received a two-year funding commitment of $85,000 each year in support of its VITA operations. The IRS requires SDC to demonstrate community investment by securing a dollar for dollar match. There is an $85,000 shortfall. If organizations and members of the community to do donate to VITA, SDC will not be able to provide the free service to nearly 8,000 individuals and families. SDC is seeking donations ranging from $5 to tens of thousands. Those interested in making a donation to help the VITA program reach its goal, can click on the “Foundation/Donate/Donate Today/VITA” tab at www.cr-sdc.org or can contact VITA program manager Diane Robinson at 414.906.2804 or firstname.lastname@example.org.
For more than 50 years, the Social Development Commission has operated as the Community Action Agency for Milwaukee County. SDC serves as a planner, coordinator, and provider of human service programs for low-income individuals and families residing in Milwaukee County. The agency is an intergovernmental commission and is governed by a board of 18 citizens from Milwaukee County, each of whom hold the title of “Commissioner.” For more information on SDC’s programs and services, visit cr-sdc.org. Connect with us on Facebook www.Facebook.com/SDCMilwaukee and Twitter www.twitter.com/CRSDC.