Understanding the Complex Process of Acquiring an ITIN for Non-Tax Purposes

The Internal Revenue Service is the only organisation that can assign an ITIN. It only issues ITINs for the purpose of filing US taxes. However, over the decades many US organisations have used the SSN/ITIN as default ID requirement for their internal processes. This cause frustrations and delays for Australians who are attempting to navigate the various US organisations and systems.

90% of people apply for an ITIN at the same time as they file their first tax return. The other 10% of people apply for a using an 'exception process'. The exception process is designed to demonstrate to the IRS that you will have US income that is subject to US tax in the future. Publication 1915 is very specific about what supporting evidence must be submitted to support a successful 'exception application'.

An example of this dilemma is the 'California Nursing Board'. In order for an Australian to get a license to practice in that state, they need to supply an ITIN. However, the IRS will not issue an ITIN for that purpose. It is a genuine catch 22.

Obtain an ITIN so you can navigate US institutions

One solution is as follows:

1. Apply for an ABN (Australian ABN). This is free and you can do it yourself. You can get an ABN as a sole-trader or you may already have a partnership in an Australian entity that has an ABN.

2. Apply for an EIN on behalf of your Australian entity. (using form SS4). <application link>

3. Once you have the EIN, you are then able to apply for an ITIN using exception 1a.

From an IRS perspective, you have registered a business in the US and because you are an owner/partner of that business, you are in the position to receive US income as a distribution. Your ITIN will be assigned without a tax return under this scenario, but you are not necessarily committing to receiving US income.

If you fall into this situation with an ABN, then Gingerbread Tax is able to assist you applying for your US EIN and ITIN.