ITIN Reform Act of 2014

Summary: ITIN Reform Act of 2014 - Amends the Internal Revenue Code to authorize the Secretary of the Treasury to issue an individual taxpayer identification number (ITIN) to an individual only if such individual: (1) submits an application for an ITIN in person at an Internal Revenue Service (IRS) taxpayer assistance center with required documentation, or (2) submits an application in person outside of the United States to an IRS employee or a designee of the Secretary at a U.S. diplomatic mission or consular post with required documentation. Exempts from such requirements: (1) the spouse, or the dependents, without a social security number of a taxpayer who is a member of the U.S. Armed Forces, and (2) nonresident aliens claiming tax treaty benefits.  Requires the Inspector General of the Department of the Treasury for Tax Administration to audit, on a biennial basis, the IRS program for issuance of ITINs pursuant to this Act and report to Congress on such audit.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``ITIN Reform Act of 2014''.

SEC. 2. REQUIREMENTS FOR THE ISSUANCE OF ITINS.

    (a) In General.--Section 6109 of the Internal Revenue Code of 1986 
is amended by adding at the end the following:
    ``(i) Special Rules Relating to the Issuance of ITINs.--
            ``(1) In general.--The Secretary may issue an individual 
        taxpayer identification number to an individual only if the 
        requirements of paragraphs (2) and (3) are met.
            ``(2) In-person application.--The requirements of this 
        paragraph are met if, with respect to an application for an 
        individual taxpayer identification number--
                    ``(A) the applicant submits an application in 
                person, using Form W-7 (or any successor thereof) and 
                including the required documentation, at a taxpayer 
                assistance center of the Internal Revenue Service, or
                    ``(B) in the case of an applicant who resides 
                outside of the United States, the applicant submits the 
                application in person to an employee of the Internal 
                Revenue Service or a designee of the Secretary at a 
                United States diplomatic mission or consular post, 
                together with the required documentation.
            ``(3) Initial on-site verification of documentation.--The 
        requirements of this paragraph are met if, with respect to each 
        application, an employee of the Internal Revenue Service at the 
        taxpayer assistance center, or the employee or designee 
        described in paragraph (2)(B), as the case may be, conducts an 
        initial verification of the documentation supporting the 
        application submitted under paragraph (2).
            ``(4) Required documentation.--For purposes of this 
        subsection--
                    ``(A) required documentation includes such 
                documentation as the Secretary may require that proves 
                the individual's identity and foreign status, and
                    ``(B) the Secretary may only accept original 
                documents.
            ``(5) Exceptions.--
                    ``(A) Military spouses.--Paragraph (1) shall not 
                apply to the spouse, or the dependents, without a 
                social security number of a taxpayer who is a member of 
                the Armed Forces of the United States.
                    ``(B) Treaty benefits.--Paragraph (1) shall not 
                apply to a nonresident alien applying for an individual 
                taxpayer identification number for the purpose of 
                claiming tax treaty benefits.
            ``(6) Term.--
                    ``(A) In general.--An individual taxpayer 
                identification number issued after the date of the 
                enactment of this subsection shall be valid only for 
                the 5-year period which includes the taxable year of 
                the individual for which such number is issued and the 
                4 succeeding taxable years.
                    ``(B) Renewal of itin.--Such number shall be valid 
                for an additional 5-year period only if it is renewed 
                through an application which satisfies the requirements 
                under paragraphs (2) and (3).
                    ``(C) Special rule for existing itins.--In the case 
                of an individual with an individual taxpayer 
                identification number issued on or before the date of 
                the enactment of this subsection, such number shall not 
                be valid after the earlier of--
                            ``(i) the end of the 3-year period 
                        beginning on the date of the enactment of this 
                        subsection, or
                            ``(ii) the first taxable year beginning 
                        after--
                                    ``(I) the date of the enactment of 
                                this subsection, and
                                    ``(II) any taxable year for which 
                                the individual (or, if a dependent, on 
                                which the individual is included) did 
                                not make a return.''.
    (b) Interest.--Section 6611 of such Code is amended by 
redesignating subsection (h) as subsection (i) and by inserting after 
subsection (g) the following new subsection:
    ``(h) Special Rule Relating to ITINs.--Notwithstanding any other 
provision of this section, no interest shall be allowed or paid to or 
on behalf of an individual with respect to any overpayment until 45 
days after an individual taxpayer identification number is issued to 
the individual.''.
    (c) Audit by TIGTA.--Not later than two years after the date of the 
enactment of this Act, and every two years thereafter, the Treasury 
Inspector General for Tax Administration shall conduct an audit of the 
program of the Internal Revenue Service for the issuance of individual 
taxpayer identification numbers pursuant to section 6109(i) of the 
Internal Revenue Code of 1986. The report required by this subsection 
shall be submitted to the Congress.
    (d) Effective Date.--
            (1) Subsection (a).--The amendment made by subsection (a) 
        shall apply to requests for individual taxpayer identification 
        numbers made after the date of the enactment of this Act.
            (2) Subsection (b).--The amendment made by subsection (b) 
        shall apply to returns due, claims filed, and refunds paid 
        after the date of the enactment of this Act.