Many US citizens living abroad did not receive a social security number (SSN) as a child, and after the age of twelve it is particularly difficult to get one. This causes big problems when trying to file US tax returns or pay taxes later on in life.
The IRS just issued new guidance September 6 on the issue of eligibility for the Streamlined filing procedure when the taxpayer who is eligible for a SSN, does not have one. In short, such a taxpayer will not be entitled to the favorable penalty provisions of the Streamlined procedure if he enters the program without a SSN.
IRS Informal Practice in the Past
In the past a very helpful IRS agent assisted one of my clients obtain an IRSN when the client had joined Streamlined but lacked a SSN (in that case, the taxpayer owed no tax). The IRS seemed to have an informal procedure in place to issue the IRSN in such cases. I know this from my own experience dealing with IRS agents in the OVDP/Streamlined division. The practice was not publicized and was contrary to the apparently clear instructions about entering the Streamlined procedure. It seems now the IRS has finally made an official announcement concerning the issue if the taxpayer lacks a SSN and enters the program. He will not be eligible for the favorable Streamlined penalty provisions and will be subject to the penalties outside the program.
“Accidental Americans” Slapped Again
Obtaining an SSN from overseas as an adult is generally a hair-pulling experience filled with endless frustration. The recently announced IRS position hardly encourages taxpayers who are already facing severe problems due to bureaucratic red tape, to become tax compliant! Accidental Americans will be the hardest hit. Many such “Accidentals” want to exit the USA and renounce US citizenship as soon as possible and do not want to wait the interminable period that it seems to take to obtain a SSN.
The relevant FAQ is copied below.
I am eligible for a Social Security Number (SSN) but do not have one at this time. May I make a submission to the Streamlined Filing Compliance Procedures without an SSN? If I make a submission without an SSN, what are the consequences?
If you are eligible for an SSN but do not have one, you may not use the Streamlined Filing Compliance Procedures. The terms of the Streamlined Filing Compliance Procedures require a valid Taxpayer Identification Number (TIN). For U.S. citizens, resident aliens, and certain other individuals, the proper TIN is a valid SSN. If you make a submission to the Streamlined Filing Compliance Procedures without a valid SSN, then the IRS may process your returns after assigning an IRSN. See IRM 220.127.116.11 and 18.104.22.168. But taxpayers that make submissions to the Streamlined Filing Compliance Procedures without valid SSNs are not eligible for the favorable penalty provisions of the Streamlined Filing Compliance Procedures. The IRS will process such returns subject to penalties applicable outside of the Streamlined Filing Compliance Procedures.
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