ODC when ITIN is issued after return due date

In January 2024, I prepared a 2022 Form 1040X for a client of mine to claim the Other Dependent Credit for their non-citizen children who lived with them in the U.S. The children applied for ITINs with the amended return, which were issued in April 2024, about 6 months after the extended due date of the 2022 return.

On Sep. 11, 2024, we received a Letter 105C, saying:

WE CAN'T ALLOW YOUR CLAIM
The taxpayer identification number assigned to you, your spouse, your
qualifying child, or your qualifying student (as applicable) was
issued after the return due date (including extensions). You can't
retroactively claim the Credit for Other Dependents.

I looked into the actual tax law and did not find any requirement that the ITIN be issued before the due date of the return. Specifically, I found the following:

(4)Partial credit allowed for certain other dependents
(A)In general
The credit determined under subsection (a) (after the application of paragraph (2)) shall be increased by $500 for each dependent of the taxpayer (as defined in section 152) other than a qualifying child described in subsection (c).

(B)Exception for certain noncitizens
Subparagraph (A) shall not apply with respect to any individual who would not be a dependent if subparagraph (A) of section 152(b)(3) were applied without regard to all that follows “resident of the United States”.

(C)Certain qualifying children
In the case of any qualifying child with respect to whom a credit is not allowed under this section by reason of paragraph (7), such child shall be treated as a dependent to whom subparagraph (A) applies.

(7)Social security number required
No credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes the social security number of such child on the return of tax for the taxable year. For purposes of the preceding sentence, the term “social security number” means a social security number issued to an individual by the Social Security Administration, but only if the social security number is issued—
(A)to a citizen of the United States or pursuant to subclause (I) (or that portion of subclause (III) that relates to subclause (I)) of section 205(c)(2)(B)(i) of the Social Security Act, and
(B)before the due date for such return.

As I interpret this, the regular child tax credit does require that a SSN be issued before the due date of the return, and if the SSN is issued afterwards, the child counts for ODC. I don't see any similar language in §24 requiring that an ITIN be issued before the due date of the return.

There are some citations in the IRM saying that the ITIN must be issued timely, but the IRM is not law and not even a legal interpretation of the law, as far as I know.

A person qualifies for ODC if the following conditions are met:
The person is claimed as a dependent on the return.
The person cannot be used to claim CTC or ACTC.
The dependent must be a U.S. citizen, U.S. national, or a U.S. resident.
The dependent must have a valid ITIN, SSN, or ATIN issued on or before the due date of the return (including extensions).
Additionally, the taxpayer and spouse, if filing jointly, must have a valid TIN issued on or before the due date of the return (including extensions).

I want to send a letter back to the IRS protesting this, but I want to make sure I haven't missed something.

What about section 24(e)?

(e) Identification requirements.---

(1) Qualifying child identification requirement.---No credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes the name and taxpayer identification number of such qualifying child on the return of tax for the taxable year and such taxpayer identification number was issued on or before the due date for filing such return.

(2) Taxpayer identification requirement.---No credit shall be allowed under this section if the taxpayer identification number of the taxpayer was issued after the due date for filing the return for the taxable year.

That's a good citation, but it specifically refers to "Qualifying child", not other dependents. And in any case this seems to be overridden by 24(h).

I still think that to claim the ODC, the dependent must have the ITIN by the extended due date of the return. See this excerpt from the 2022 instructions for Schedule 8812:

Taxpayer Identification Number Requirements

You Must Have a TIN by the Due Date of Your Return

If you, or your spouse if filing jointly, do not have an SSN or ITIN issued on or before the due date of your 2022 return (including extensions), you cannot claim the CTC, ODC, or ACTC on either your original or an amended 2022 return.

If you apply for an ITIN on or before the due date of your 2022 return (including extensions) and the IRS issues you an ITIN as a result of the application, the IRS will consider your ITIN as issued on or before the due date of your return.

Each Qualifying Child You Use for CTC or ACTC Must Have the Required SSN

If you have a qualifying child who does not have the required SSN, you cannot use the child to claim the CTC or ACTC on either your original or an amended 2022 return. The required SSN is one that is valid for employment and is issued before the due date of your 2022 return (including extensions).

If your qualifying child was born and died in 2022 and you do not have an SSN for the child, attach a copy of the child's birth certificate, death certificate, or hospital records. The document must show the child was born alive.

If your qualifying child does not have the required SSN, but has another type of taxpayer identification number issued on or before the due date of your 2022 return (including extensions), you may be able to claim the ODC for that child. See Credit for Other Dependents (ODC), later.

https://www.irs.gov/pub/irs-prior/i1040s8--2022.pdf

The 2023 instructions are even more emphatic about this point:

Each Dependent You Use for the ODC Must Have a TIN by the Due Date of Your Return

If you have a dependent who does not have an SSN, ITIN, or ATIN issued on or before the due date of your 2023 return (including extensions), you can’t use that dependent to claim the ODC on either your original or an amended 2023 return.

See also IRM 3.12.3.26.18.3(1):

3.12.3.26.18.3 (11-23-2021)
General Information (EC 287)

(1) Beginning with TY18, each qualifying dependent claimed for the Child Tax Credit (CTC) and/or Refundable Child Tax Credit/Additional Child Tax Credit (ACTC) on the return must have a valid Social Security Number (SSN) issued by the Social Security Administration (SSA) before the due date of the tax return (including extensions) and dependents must be under the age of 17. In TY21, taxpayers qualify for the Refundable Child Tax Credit with qualifying dependents under the age of 18. Dependents who can’t be claimed for CTC may be claimed for the Credit for Other Dependents (ODC). Each qualifying dependent claimed for ODC on the return must have a valid SSN or Individual Taxpayer Identification Number (ITIN) or Adoption Taxpayer Identification Number (ATIN) issued on or before the due date of the return (including extensions). There is no age limitation associated with ODC, and ODC is allowed for all dependents listed on the return (excluding the primary and secondary taxpayers).

Disregard everything that I said above. The IRS is wrong in stating in the Schedule 8812 instructions and in the IRM that the dependent must have an SSN or ITIN by the extended due date of the return in order for the taxpayer to claim the $500 ODC.

Section 24(h), which provides the rules for the child tax credit for the years 2018 through 2025, was added by section 11022(a) of the Tax Cuts and Jobs Act (P.L. 115-97). Part of the Committee Report for this section states the following:

The conference agreement temporarily increases the child tax credit to $2,000 per qualifying child. The credit is further modified to temporarily provide for a $500 nonrefundable credit for qualifying dependents other than qualifying children. The provision generally retains the present-law definition of dependent.

Under the conference agreement, the maximum amount refundable may not exceed $1,400 per qualifying child. Additionally, the conference agreement provides that, in order to receive the child tax credit (i.e., both the refundable and non-refundable portion), a taxpayer must include a Social Security number for each qualifying child for whom the credit is claimed on the tax return. For these purposes, a Social Security number must be issued before the due date for the filing of the return for the taxable year. This requirement does not apply to a non-child dependent for whom the $500 non-refundable credit is claimed.

[footnotes omitted] See H. Rept. 115-466, 115th Cong., 1st Sess. (12/15/2017), p. 225-227.

https://www.congress.gov/congressional-report/115th-congress/house-report/466/1?outputFormat=pdf

A statement in a committee report holds much more water than IRS form instructions or a statement in the IRM.

In my opinion, you need to appeal the disallowance of the claim and show the Appeals Officer the committee report.

And the cost to the client of fighting this vs the amount of the credit?

Or is this a pro bono fight on principle?

Disregard everything that I said above. The IRS is wrong in stating in the Schedule 8812 instructions and in the IRM that the dependent must have an SSN or ITIN by the extended due date of the return in order for the taxpayer to claim the $500 ODC.

Under the conference agreement, the maximum amount refundable may not exceed $1,400 per qualifying child. Additionally, the conference agreement provides that, in order to receive the child tax credit (i.e., both the refundable and non-refundable portion), a taxpayer must include a Social Security number for each qualifying child for whom the credit is claimed on the tax return. For these purposes, a Social Security number must be issued before the due date for the filing of the return for the taxable year. This requirement does not apply to a non-child dependent for whom the $500 non-refundable credit is claimed.

NoCal - Actually, I think you were correct in your earlier posts.

"This requirement does not apply ...". What's the requirement?

It seems to me the requirement refers to the need for a Social Security number as referenced in the prior sentence. I see no reference to ITIN in the passage. Am I missing something? Like I said I think you were right the first time.

NYea, the "requirement" is that the dependent (not a qualifying child) must have an SSN, ITIN or ATIN on or before the extended due date for filing the return. There is no such requirement in section 24. The Conference Committee Report clearly states that although there is a requirement for a qualifying child to have an SSN before the extended due date for filing the return, that requirement doesn't apply for purposes of the Other Dependent Credit.

Footnote 74 (which I omitted) on page 227 of the committee report states:

74 Additionally, a qualifying child who is ineligible to receive the child tax credit because that child did not have a Social Security number as the child’s taxpayer identification number may nonetheless qualify for the non-refundable $500 credit.

If you have legal authority that you can cite that demonstrates that a dependent (not a qualifying child) must have an SSN, ITIN or ATIN on or before the extended due date for filing the return, then please provide it.

The Joint Committee on Taxation (JCS-1-118) discusses the issue

The Social Security number requirement does not apply with respect to a qualifying dependent for whom a $500 nonrefundable
credit is claimed. In order to claim the $500 nonrefundable credit with respect to any individual, however, the taxpayer must include such individual’s TIN on the tax return.226

JCT reports are included in the list of authorities in Reg. 1.6662-4(d). I've only pasted a small snip. Reading the full explanation for section 24 is always best (I think it starts on page 43). I would also note that the footnote 226 suggests a possible need for a technical correction.

Since amended returns have no statutory provision (561 F.2d 1115 CA4) I think tax return suggests original return

The Joint Committee on Taxation’s explanation actually supports my position.

In order to claim the $500 nonrefundable credit with respect to any individual, however, the taxpayer must include such individual’s TIN on the tax return.226

226 A technical correction may be necessary to reflect this intent.

I haven't found any such technical correction in any tax law that was enacted after the TCJA.

Section 24 doesn’t have any requirement for the SSN or ITIN of the dependent to be reported on a return that is filed on or before the extended due date in order to qualify for the ODC. So, I think the IRS is wrong.

Thanks for the discussion. I haven't been able to find any official clarification from the IRS in the form of Regs or Rulings. Instructions and publications can be disregarded. Nor have I been able to find any Tax Court cases on the issue. The only thing I have to go on is the text of §24. The requirement to have an identification number before the due date of the return only applies to a "qualifying child" IRC §24(e). Because we are claiming the Other Dependent Credit, these are not "qualifying children" as defined in §24.

IRC §24(h)(4) imposes no identification requirement other than by reference to §24(h)(7), but specifically says that §24(h)(4) applies when the requirement of §24(h)(7) is not satisfied. I double-checked the reference to §152, but §152 imposes no identification requirements.

My conclusion is that the IRS denial of the Other Dependent Credit is incorrect, IRM and instructions notwithstanding.

As far as the cost, defense of positions taken on the return is, for my office, included in the tax preparation fee.

On 1/2/2019, the House Ways and Means Committee proposed a set of technical corrections to the TCJA. Here’s the link:

https://republicans-waysandmeansforms.house.gov/uploadedfiles/tax_technical_and_clerical_corrections_act_discussion_draft.pdf

Here are the technical corrections to sections 24(h)(4) and 24(h)(7) that are shown on pages 10-11 of the proposal:

(d) AMENDMENTS RELATING TO SECTION 11022.—

(1) Section 24(h)(4) is amended by adding at the end the following new subparagraph:

“(D) IDENTIFICATION REQUIREMENT.—No increase shall be allowed under subparagraph (A) to a taxpayer with respect to any dependent unless the taxpayer includes the name and taxpayer identification number of such dependent on the return of tax for the taxable year.”.
(2) Section 24(h)(7)(B) is amended to read as follows:

“(B) on or before the due date for filing such return.”

This technical correction would have required a dependent’s TIN to be included on the return filed on or before the due date in order to qualify for the ODC. This was never enacted.

If the House Ways and Means Committee believed that a technical correction regarding the dependent’s TIN was needed to qualify for the ODC, and it was never enacted, then this proves that the law as written does not have the TIN requirement.

NoCal - I really do appreciate your posts with good cites but I think on this one we will need to disagree. The fact that the Technical Corrections proposal was not enacted proves nothing except the gang of 535 is truly dysfunctional.

In April 2021, the CRS issued a report on the corrections. Although no formal definition of a technical correction exists, some understand technical corrections to be provisions that are generally noncontroversial changes to the text of already enacted tax legislation to ensure that the law as enacted is consistent with Congress’s original intent.

In the W and M proposal, Chairman Brady writes: This discussion draft contains the legislative text of technical and clerical corrections with respect to enacted tax law that are needed to properly reflect the original Congressional intent or that provide clarifications consistent with such intent

We know Congressional intent is one of the authorities contained in Reg. 1.6662-4(d).

The above referenced CRS says: The TCJA also enacted a new temporary credit for non-child-tax credit-eligible dependents. … The provision clarifies that in order for a taxpayer to receive the “credit for other dependents,” the taxpayer must provide a tax identification number (TIN), which is generally an SSN or an individual taxpayer identification number (ITIN). It also clarifies that for the purposes of claiming the child credit or credit for other dependents, the applicable TIN must be issued on or before the due date for filing the return (current law states before).

In the Conference agreement for TCJA it is noted: House Bill: The provision requires that the taxpayer include the name and taxpayer identification number of each qualifying child and dependent on the tax return for each taxable year. Congress intended that these TINs be issued on or before the due date.

I hope our original poster lets us know what happens. It was suggested an AO would rule in favor of the taxpayer. I find it hard to believe an AO and the group manager would take a position in opposition to the IRM content given IMO the clear intent of Congress.

You previously suggested this was controlling Additionally, the conference agreement provides that, in order to receive the child tax credit (i.e., both the refundable and non-refundable portion), a taxpayer must include a Social Security number for each qualifying child for whom the credit is claimed on the tax return. For these purposes, a Social Security number must be issued before the due date for the filing of the return for the taxable year. This requirement does not apply to a non-child dependent for whom the $500 non-refundable credit is claimed.. But I fail to see how it controls. The "red" portion is the requirement. The green portion says the requirement is not applicable to the ODC - I agree - the requirement for a SS number is not applicable. It seems to me the green sentence is completely silent on the ITIN issue and Congressional intent must carry the day.

NYea, we will have to “agree to disagree.”

I don’t think you understand the concept of Congressional intent. Where the plain language of the statute conflicts with the intent of Congress (as shown in the legislative history), the plain language of the statute controls. See CRI-Leslie, LLC v. Commissioner, No. 16-17424 (11th Cir., 2/15/2018), aff’g. 147 T.C. No. 8 (2016).

Legislative history includes committee reports, floor debates, committee hearings, the bill and its amendments, remarks by the bill’s sponsors and committee prints that occurred BEFORE the legislation was enacted. It does NOT include documents that were issued AFTER the legislation was enacted.

What you have cited as Congressional intent is (1) Chairman Brady’s discussion draft on technical corrections to the TCJA dated 1/2/2019, and (2) a CRS report issued in April 2021. These were issued AFTER the TCJA was enacted (12/22/2017), and therefore, are not part of the legislative history of the TCJA.

You have also cited as Congressional intent your belief of what the Conference Agreement on section 11022 of the TCJA says. But your belief of what it says isn’t what it actually says. This is the actual text from the Conference Agreement:

The conference agreement temporarily increases the child tax credit to $2,000 per qualifying child. The credit is further modified to temporarily provide for a $500 nonrefundable credit for qualifying dependents other than qualifying children. The provision generally retains the present-law definition of dependent.

Under the conference agreement, the maximum amount refundable may not exceed $1,400 per qualifying child. 73 Additionally, the conference agreement provides that, in order to receive the child tax credit (i.e., both the refundable and non-refundable portion), a taxpayer must include a Social Security number for each qualifying child for whom the credit is claimed on the tax return. For these purposes, a Social Security number must be issued before the due date for the filing of the return for the taxable year. This requirement does not apply to a non-child dependent for whom the $500 non-refundable credit is claimed.74

73 Unlike both the House bill and the Senate amendment, the conference agreement uses an indexing convention that rounds the $1,400 amount to the next lowest multiple of $100.

74 Additionally, a qualifying child who is ineligible to receive the child tax credit because that child did not have a Social Security number as the child’s taxpayer identification number may nonetheless qualify for the non-refundable $500 credit.

This text clearly indicates that Congress did not intend for the TIN requirement to apply to the ODC when it passed the legislation.

But even if you're right and Congress did intend for the TIN requirement to apply to the ODC, you are basing your argument on Congressional intent, which is in conflict with the plain language of the statute (no TIN requirement to claim the ODC). So, the plain language of the statute controls.

I am done with this discussion.

...a taxpayer must include a Social Security number for each qualifying child for whom the credit is claimed on the tax return. For these purposes, a Social Security number must be issued before the due date for the filing of the return for the taxable year. This requirement does not apply to a non-child dependent for whom the $500 non-refundable credit is claimed.74

74 Additionally, a qualifying child who is ineligible to receive the child tax credit because that child did not have a Social Security number as the child’s taxpayer identification number may nonetheless qualify for the non-refundable $500 credit.

This text clearly indicates that Congress did not intend for the TIN requirement to apply to the ODC when it passed the legislation.

I am done with this discussion.

Since you're done with this discussion, I'll be brief and not discuss Chairman Brady's comments and the relevant technical correction which you previously posted. We will simply disagree.

However, I do not truly understand your logic in asserting the "blue" statements clearly indicate that Congress did not intend for the TIN requirement for ODC.

We agree, I presume, there are two TINs relevant to this discussion - the SSN and the ITIN. Both "blue" statements say the SSN is not required for the ODC. We agree. But, how do you make the jump that there is no TIN requirement when a taxpayer is required to have either an SSN or ITIN for a dependent? The "blue" is eliminating one of them - not both. The original poster did ask about the ITIN. Perhaps I'm missing something right in front of me but I simply don't see the logic.

Although I said that I was done with this discussion, I just HAD to post this.

The National Taxpayer Advocate agrees that there is no TIN requirement in the statute for claiming the other dependent credit. She has recommended a legislative change in her “2024 Purple Book.” Click on #57 at the bottom of this page and read her 2-page discussion.

https://www.taxpayeradvocate.irs.gov/reports/2023-annual-report-to-congress/national-taxpayer-advocate-2024-purple-book/

I see several issues with their positions on some of these topics. Not sure all were thought through.

Both the CTC and the ODC are allowed for individuals who are considered dependents. 151(e) requires a TIN for dependents. So I’m not real sure what taxpayer advocate is confused about. It seems to me IRS made the correct interpretations. I don’t think it’s a stretch for you, me, IRS, TAS, or Judge Holmes to apply 151(e) when determining whether a TP qualifies for ODC for a dependent.

24(h)(7) specifically addresses an SSN for CTC. Since 151(e) requires a TIN for all dependents, then we can conclude a ITIN is needed for dependents who don’t have an SSN for the ODC.

As I said, I also have other issues with this report.

NYEA said it more eloquently than I.

Both the CTC and the ODC are allowed for individuals who are considered dependents. 151(e) requires a TIN for dependents. So I’m not real sure what taxpayer advocate is confused about. It seems to me IRS made the correct interpretations. I don’t think it’s a stretch for you, me, IRS, TAS, or Judge Holmes to apply 151(e) when determining whether a TP qualifies for ODC for a dependent.

24(h)(7) specifically addresses an SSN for CTC. Since 151(e) requires a TIN for all dependents, then we can conclude a ITIN is needed for dependents who don’t have an SSN for the ODC.

As I said, I also have other issues with this report.

Ah, but when is the ITIN needed? I always thought it came under the same rules as the SSN but, having wandered into the labyrinth that is the Internal Revenue Code, I am not so sure.