There's the version of tax resolution the late-night commercials sell you. Then there's how it actually works. I'm Darrin Mish, a Tampa tax attorney. I've spent 32 years on the inside of these cases. Here's the real version.
The Question That Stops Refunds Cold
A foreign seller closes on U.S. real estate. The title company withholds 15 percent under FIRPTA. The seller wants the money back. Someone tells them they need an ITIN to file the U.S. return. The seller asks: is there a way around it?
The honest answer is no. The IRS cannot issue a refund of FIRPTA withholding to a person who has no U.S. taxpayer identification number. The system literally cannot process the refund without one. The work-around is not to skip the ITIN – it is to get the ITIN efficiently.
Why the ITIN Is Required
The IRS uses taxpayer identification numbers to track every return, every payment, and every refund. Without a TIN, the return cannot be entered into the system. The withholding cannot be matched to a taxpayer. The refund cannot be issued.
For U.S. citizens and resident aliens, the TIN is a Social Security number. For foreign persons without a Social Security number, the TIN is an Individual Taxpayer Identification Number (ITIN), issued by the IRS on Form W-7.
The ITIN exists specifically because the IRS recognized that foreign persons need a TIN to file U.S. returns and claim refunds. The system was built for exactly this situation.
How the ITIN Application Works
Form W-7, “Application for IRS Individual Taxpayer Identification Number,” is the application form. The W-7 must include:
Identification verification. The IRS requires either an original document or a certified copy from the issuing authority. The most common identification document is a passport, which serves both the identity and foreign status requirements in one document.
A reason for needing the ITIN. The W-7 has check boxes for the reason. For a FIRPTA refund claim, the box typically used is “b – Nonresident alien filing a U.S. tax return.”
The federal tax return (Form 1040-NR) attached to the W-7, demonstrating the need for the ITIN. The ITIN cannot be obtained in advance of needing it; it must be tied to a current filing requirement.
The Three Ways to Submit Identity Documents
The hardest part of the W-7 is the identity verification. The IRS has three options, each with different cost and convenience trade-offs.
Option one: mail the original passport (and any other supporting documents) to the IRS. The IRS reviews the original and returns it. This option works but requires sending your passport to a U.S. government office and being without it for several weeks. Most foreign applicants reject this option.
Option two: have the passport certified by the issuing authority. Each country handles this differently. Some embassies and consulates can issue certified copies. The certification must include the specific language the IRS requires – not just any notarized copy.
Option three: use an IRS Certifying Acceptance Agent (CAA). A CAA is an authorized agent who can verify identity in person and certify the passport. The CAA submits the verified W-7 to the IRS on the applicant’s behalf. This is generally the most reliable path and the one most foreign applicants use. CAAs charge a fee for the service.
How Long the ITIN Takes
ITIN processing has run roughly 8 to 14 weeks in recent years. Peak season (the months around April 15 and June 15) can push it longer. Off-peak processing can be faster.
The ITIN itself, once issued, is valid for use immediately. The refund return that was attached to the W-7 is then processed and the refund issued.
The total time from filing the W-7 with the 1040-NR to refund issuance is typically 9 to 18 months. The ITIN is the first 8 to 14 weeks of that. The return processing and refund are the rest.
The Refund Cannot Start Without the ITIN
A common misconception is that the FIRPTA refund can be filed first and the ITIN added later. It cannot. The 1040-NR has an identifier field that must be populated. Without the ITIN, the return is incomplete and the IRS will reject it.
This is why advance planning matters. Foreign sellers who know they will need a refund should start the ITIN process at or before closing, not after. The ITIN may not be issued in time to file the return before extensions expire, which can affect interest calculation.
What About Refund Claims for Closed Years?
The statute of limitations for refund claims is three years from the due date of the return (or two years from the date of payment, whichever is later). For a FIRPTA-withheld amount, the clock starts running from April 15 of the year following the sale.
A foreign seller who realized in 2026 that they had FIRPTA withholding in 2022 has until roughly April 15, 2026 to file a refund claim. Miss that deadline and the refund is barred forever, regardless of the merits.
The ITIN process needs to be factored into the deadline. A seller starting the ITIN application close to the statute deadline may run out of time. Starting early matters.
The Multi-Year Refund Scenario
Some foreign sellers have multiple years of FIRPTA withholding from multiple sales. Each year requires its own 1040-NR. One ITIN works across all years.
The cleanest approach is to file all available years simultaneously once the ITIN is obtained. The IRS processes them together, which reduces the back-and-forth and clarifies the basis position across years.
For sellers with rental property income reported on annual 1040-NRs in addition to a sale year, the basis is established by prior filings, which often simplifies the sale-year refund claim.
If the ITIN Application Was Rejected
The IRS rejects W-7 applications regularly, usually for documentation reasons. Common rejection causes:
The supporting identification documents do not match the requirements (e.g., notarized rather than certified, or missing the foreign status verification).
The accompanying federal tax return has errors or missing schedules.
The reason for needing the ITIN was incorrectly selected on the W-7.
The applicant already has an SSN or prior ITIN and the IRS records show it.
Rejection requires resubmission with corrections. The clock essentially restarts. This is another reason to do the application correctly the first time with a CAA or careful self-preparation.
Three Steps to Start the ITIN Process
First, locate a Certifying Acceptance Agent in your country or a nearby country. The IRS maintains a list of authorized CAAs by country on its website.
Second, gather identity documents. Passport is the standard. Some applicants also need national identification cards or visa documents depending on the specifics.
Third, prepare the 1040-NR for the sale year (or years). The W-7 must accompany a tax return showing the need for the ITIN.
Get the Process Started
After 32 years of handling cross-border tax matters, the ITIN process is one of the most common chokepoints in FIRPTA refund recovery. Contact the Law Offices of Darrin T. Mish, P.A. at (813) 229-7100. We coordinate the ITIN application with the refund return so the process moves on a single track rather than getting stuck at the identity verification step.