An Individual Taxpayer Identification Number (ITIN) is issued by the United States Internal Revenue Service (IRS) and is used to report U.S. income by individuals who are not eligible to receive a Social Security Number (SSN), including EB-5 investors.

In the United States, anyone who earns income is required by law to pay taxes on that income. Further, the IRS requires those paying income (e.g., wages) to withhold income taxes from those receiving that income. With respect to the EB-5 Program, the withholding agent is typically the limited partnership or limited liability company formed specifically for the purpose of investing EB-5 funds into a job creating entity.

Following are some of the top reasons individuals may need an ITIN:

1. Earning Income on Interest – Individuals with bank accounts that earn interest in the United States will need an ITIN to report that income on a U.S. tax return.
2. Making Real Estate Investments – Buying and selling real estate in the U.S. can be a complicated endeavor. A foreign national will likely need an ITIN to complete such transactions.
3. Studying or Teaching in the U.S. – Some students and faculty qualify for Social Security Numbers (SSNs), but those who do not may be required to apply for ITINs.
4. Earning Income on Investments – Income from U.S. investments requires tax identification. Any foreign national who earns income from investments such as business investments, equity or debt investments, or limited partnership investments (e.g., EB-5 offerings) is required to obtain an ITIN.

Why EB-5 Investors Need ITINs

For EB-5 general partners and regional centers, ensuring that EB-5 investors have obtained ITINs is a vital part of maintaining government compliance. ITINs are needed to (1) properly withhold income tax on distributions to investors, (2) submit accurate statements to the IRS at year-end, and (3) mitigate risks associated with non-compliance of IRS rules and regulations including fines and other penalties. The IRS is more likely to penalize a U.S. entity such as a regional center or a fund manager for lack of proper income tax withholding than they are to penalize foreign investors for not properly disclosing income. The onus is on the fund and the regional center to comply with U.S. tax laws and to ensure their investors are doing so as well.

For EB-5 investors, complying with U.S. laws is a critical component of the immigration process, and paying income taxes is extremely important in the United States. ITINs allow EB-5 general partners to properly withhold income taxes from investors to satisfy the investors’ tax obligations with the IRS. Properly withholding income ensures investors are compliant with IRS regulations with respect to their EB-5 investments and helps prevent the need for additional filings from investors prior to obtaining permanent residency.

How EB-5 Investors Obtain Their ITINs

Individuals can apply for ITINs themselves but will be required to fill out IRS forms in English. Navigating forms in English can be challenging for some applicants. Additionally, individuals are required to determine the appropriate designations or exemptions requested in the form. When applying themselves, individuals are required to mail their original, physical passports and other identification documents to the IRS for processing. This means individuals may be months without those documents while the IRS processes their application. Additionally, the translation of foreign mailing addresses increases the chance for errors and therefore increases the likelihood that vital documents are lost in the mail when returned by the IRS after processing.

A more convenient way to obtain an ITIN is to engage a Certified Acceptance Agent (CAA), who obtains the ITIN on behalf of the investor. CAAs are licensed by the IRS to assist with the ITIN application process and act as the liaison between the IRS, investors, and the EB-5 fund. Generally, an EB-5 fund engages CAAs directly for services, and fees are paid out of limited partnership expenses. The CAA completes the applications for the investors, certifies each investor’s identification documents so they do not have to be mailed to the IRS, and acts as a point of contact with the IRS to ensure smooth processing.

Why Choose USA ITIN Experts?

USA ITIN Experts is a team of IRS-licensed CAAs who can help regional centers and fund managers with IRS compliance. Translators are on staff for all languages, and ITINs are usually approved in as little as 6 weeks. The team works directly with EB-5 fund managers and the IRS, serving as a central point of contact for both. This allows IRS inquiries to be answered quickly and efficiently and prevents fund managers from having to track down ITINs from investors after they are received. Contact us today to get started!