Yes, if your application is rejected, the IRS will contact you to inform you that your application has not been accepted.
The legal reasoning behind this is based on the IRS FAQ which states that if you are not eligible, the IRS will contact you to inform you that your application has not been accepted. This ensures that applicants are aware of the status of their application and can take any necessary follow-up actions.
Sources:
Publication 1101 (4/2023)
Publication 4671 (4/2023)
IRM Part 6. Human Resources Management. Chapter 332. Recruitment and Selection Through Competitive Examination. Section 2. New Hire Eligibility and Pre-Employment Review
IRM Part 3. Submission Processing. Chapter 21. International Returns and Documents Analysis. Section 264. IRS Individual Taxpayer Identification Number (ITIN) Acceptance Agent Program
Publication 1855
IRM Part 21. Customer Account Services. Chapter 3. Taxpayer Contacts. Section 8. Tax Exempt/Government Entities (TEGE) Customer Account Services (CAS) Telephone Operations
