CUNA Comment Letter

Proposed Changes to Individual Taxpayer Identification Number

March 9, 2006

Ms. Francine Prince
Chief, ITIN Program Office
Internal Revenue Service
401 W. Peachtree Street NW
Mail Stop 97 WI
Atlanta, GA 30308

Dear Ms. Prince,

The Credit Union National Association (CUNA) appreciates the opportunity to comment on whether the IRS should no longer issue individual taxpayer identification numbers (ITIN) to nonresident aliens (NRA) whose only purpose for obtaining an ITIN is to open an interest bearing deposit or share account. By way of background, CUNA is the largest credit union trade association, representing 87% of our nation’s 8,900 state and federal credit unions, which serve nearly 87 million members.

Summary of CUNA’s Position

Discussion of CUNA’s Views

Credit unions strive to serve all individuals within their fields of membership, including those individuals who do not have traditional forms of identification. To enable credit unions to serve these individuals, credit unions rely on using a taxpayer identification number (TIN), whether a social security number (SSN), employer identification number (EIN), or individual taxpayer identification number (ITIN), to supplement the verification and to internally identify those individuals opening an account. Without an ITIN, it would be more burdensome, if not impossible, to obtain a valid identification number, retrieve credit histories, and maintain internal records on nonresident aliens. The unintended consequence of this proposal will likely be that non resident aliens will have fewer financial services available to them.

One advantage of an ITIN is that each assigned number is unique to an individual. The uniqueness of the ITIN is relied on by our country’s financial system in a number of ways. Financial histories are provided by credit bureau agencies, such as Equifax, Transunion, and Chexsystems, which are TIN-generated. Credit unions use an ITIN to request a financial history of a NRA accountholder. Without an ITIN, credit unions will not be able to retrieve a credit history and will no longer be able to make sound loan decisions on these individuals. Credit bureaus and financial institutions would need to make changes to the method by which credit histories are retrieved, which would be a costly consequence to the proposed changes.

We recognize that the regulations implementing Section 326 of the USA PATRIOT Act do not require a financial institution to obtain an identification number from every individual opening an account. While not having an ITIN does not legally preclude a credit union from opening an account for a nonresident alien, institutions may be very reluctant to open accounts without an assigned number. An ITIN further provides consistency and uniformity, making the identification process more reliable. Without the use of an ITIN to open accounts, credit union employees would need to be trained on the use of various identification numbers issued throughout the world to satisfy the requirements of the Customer Identification Program regulations.

Currently, many data processing systems that are used at credit unions have a mandatory nine-digit field that new account representatives must complete with a TIN. Because a TIN must be entered for every new account opened, credit unions’ policy typically require a TIN for every new account opened. Data processing changes would need to be made to accommodate various identification number formats, which would most likely result in additional costs and burdens to credit unions.

Conclusion

CUNA believes that if the ITIN Program Office ceases to issue ITINs to non resident aliens, the unfortunate outcome of such a decision would be that nonresident aliens would be further limited in their financial services options. IRS should provide guidance on what documents are acceptable as proof of ownership of a financial institution account when applying for an ITIN. If you have any questions, please contact me at (202) 638-5777.

Sincerely,

Lilly Thomas