But that’s useless advice without specific help on exactly what to do. Here is the IRS web page on how to get an Individual Taxpayer Identification Number if you’re outside the United States. The instructions to Form W-7 can also help in the “What do I do next?” department.

Guess what? Now it’s worse.

The IRS thinks that people are using the ID number system for non-tax reasons, e.g., getting personal identification. So they are tightening up the process. Some highlights:

• In the old days, there was a list of 40 types of ID that could be used to prove you are who you are. Now only 13 types of ID will work.

• Now you have to prove that you have a tax-driven need before you’ll get an identification number.

Use Form W-7 to apply for the Individual Taxpayer Identification Number.

Follow the extended entry to read the full press release from the IRS.

Here is the press release from the IRS:

IRS Announces Revisions to ITIN Applications

IR-2003-140, Dec. 17, 2003

WASHINGTON — The Internal Revenue Service today announced several steps to strengthen controls over the issuance of Individual Taxpayer Identification Numbers. The changes will help ensure that ITINs are issued for their intended tax administration purpose for administering the tax code and not for other reasons, such as providing personal identification. In addition, the IRS is taking steps to help ensure that applicants can continue to obtain ITINs without undue burden.

Beginning today, new ITIN applicants must use a revised Form W-7, Individual Taxpayer Identification Number Application. ITIN applicants also must provide proof that the ITIN will be used for tax administration purposes. For applicants seeking an ITIN in order to file a tax return, the return must be filed along with the W-7.

“About one-quarter of the ITINs issued for tax return purposes never actually find their way onto a tax return,” said IRS Commissioner Mark W. Everson. “The steps taken today ensure ITINs will be issued only to those seeking to comply with their tax obligations.”

Federal law requires individuals with U.S. income, regardless of immigration status, to pay U.S. taxes. The ITIN, a nine-digit number that begins with the number 9, was created for use on tax returns for those taxpayers who do not qualify for a Social Security Number. The IRS has issued 7 million ITINs since 1996.

However, some ITINs issued by the IRS do not appear in tax filings or tax reporting documents and may have been procured solely to serve as a form of identification. Earlier this year, the IRS issued letters to all governors and state motor vehicle departments advising that ITINs were not designed to serve as personal identification and would not be suitable for determining identification of applicants for driver’s licenses.

After a review of the ITIN program, the IRS will implement these changes effective immediately:

• All new ITIN applicants will have to show a federal tax purpose for seeking the ITIN. For those seeking an ITIN to meet their income tax filing obligations, this will require attaching a federal tax return to the Form W-7 when they are ready to file their tax return with the IRS.

• ITIN applications without proof of need for tax administration purposes will be rejected.

• The IRS will reduce to 13 from 40 the number of documents it will accept as proof of identity to obtain an ITIN. The 13 acceptable documents are listed in the new Form W-7 instructions.

• The IRS also will change the appearance of the ITIN from a card to an authorization letter to avoid any possible similarities with a Social Security Number card.

A small number of non-U.S. residents apply for an ITIN to report income under a tax treaty, and a small number of U.S. resident and non-resident applicants apply for an ITIN to report income from a U.S. bank or brokerage account. Neither type of applicant will be required to file a tax return along with their ITIN application. Non-resident applicants will be required to furnish evidence of their ownership of the asset that gave rise to the reporting obligation. Resident applicants will be required to furnish evidence of actual rather than intended ownership of the bank or brokerage account.

The IRS will continue to help individuals who seek ITINs comply with the tax laws. The IRS has found no indication of any differences in accuracy rates between tax returns filed with ITINs and tax returns filed with SSNs. The agency understands the need to continue to monitor challenges posed by ITINs, and will do so over the course of time.

The IRS will continue to review ways to improve Form W-7 and will conduct a public comment period until June 15, 2004. The IRS will be publishing an announcement in the Internal Revenue Bulletin that will ask for comments on the revised form and the application process. Internal Revenue Bulletin 2004-2, to be published on Jan. 12, 2004, will give instructions on when and how comments may be submitted.

Additional information is available at IRS.gov, where English and Spanish versions of the Form W-7 are available. A list of frequently asked questions (FAQs) also is available.

Related Items:

ITIN Frequently Asked Questions, Form W-7, Application for IRS Individual Taxpayer Identification Number (PDF 100K)

Forma W-7, Solicitud de Número de Identificación Personal del Contribuyente del Servicio de Impuestos Internos (PDF 100K)

For those title companies, escrow companies, and other settlement agents that don’t have it yet, here is the IRS’s official new version of the Certificate of Nonforeign Status for an entity seller. This is what a seller signs if he/she/it doesn’t want the 10 percent withholding.

CERTIFICATE OF NONFOREIGN STATUS—ENTITY SELLER

“Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U.S. tax purposes (including section 1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity. To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by [name of transferor], the undersigned hereby certifies the following on behalf of [name of the transferor]:

1. [Name of transferor] is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax
Regulations);

2. [Name of transferor] is not a disregarded entity as defined in section 1.1445-2(b)(2)(iii);

3. [Name of transferor]’s U.S. employer identification number is
_________; and

4. [Name of transferor]’s office address is ___________________.

[Name of transferor] understands that this certification may be disclosed to the Internal Revenue Service by transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury, I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct, and complete, and I further declare that I have authority to sign this document on behalf of [name of transferor].

[Signature(s) and date]

[Title(s)]”

It’s called an “Individual Taxpayer Identification Number” for nonresidents. It’s frequently referred to by the acronym “ITIN.”

Get your ITIN by completing and filing Form W-7. The easiest way is for you to go to a U.S. Embassy or Consulate in your home country. The alternative is to send the whole package (application and supporting documentation) to the IRS in Philadelphia.

It will take a long time to process. The IRS claims four to six weeks. Nope. Six weeks is the least you can expect.

My experience is that nonresident investors in U.S. real estate only occasionally have gone through the bother of getting a U.S. taxpayer identification number. They don’t WANT one: They don’t want to be visible to the U.S. government.

Up to now, it might have been possible to slide through that way. I remember well one situation where the mortgages bore the obviously fake identification number of 555-55-5555.

No more. Tax regulations published in August and effective November 3, 2003 say that the buyer must give the IRS the seller’s taxpayer identification number.

If you’re a nonresident and you’re selling U.S. real estate, you have a hard choice: Get an identification number and file U.S. tax returns, or walk away from the 10 percent (of sale price) withholding tax.