The IRS created a webpage on its website entitled, New Identification Number Implemented for Certain Form Information Returns, describing a new requirement of Unique Reference Identification Numbers. The webpage states that reporting this reference number is optional for tax years of foreign entities beginning in 2011, but will be mandatory in subsequent tax years.
Beginning with US federal tax returns filed for the 2012 tax year, taxpayers who file Forms 5471, 8858, or 8865 related to their foreign subsidiaries will be required to provide a Unique Reference Identification Number (URI) or Employer Identification Number (EIN) for all foreign entities reported on these forms. A URI is a taxpayer-selected number that must be alphanumeric and limited in length to 50 characters or less.
The IRS will neither require that the taxpayer “apply” for a URI nor that the URI be approved by the IRS once selected.
Once the taxpayer selects the URI, it must remain the same for the foreign entity to which it is assigned for subsequent years. Should the ownership of the foreign entity change, the URI may need to be “correlated” by reporting the new URI followed by the previous URI on the reporting form.
The IRS website states that failure to provide the required URI may result in a penalty. The establishment and implementation of URIs could pose varied obstacles for taxpayers who are unprepared. Because the URI implementation has not been extensively publicized by the IRS, affected taxpayers will want to determine if action is needed so they are prepared for their 2012 tax returns.