Nov 27, 2017 Corrected update - Ontario Photo Card
Regarding Ontario (Canadian province akin to a US state) photo ID card, IRS has now told me:
“The document would be considered a National Identification Card, but should be current (meaning, not expired), and contain the applicant's name, photograph, address, date of birth and expiration date. National ID cards are acceptable as proof of either foreign status or identity, but will need to be combined with a second form of documentation, i.e. a Civil Birth Certificate.”
There is no W-7 requirement to use only your passport for ID but if you use a valid passport, you do not need to submit any other documents to prove your “foreign status” or “identity.” If you use your driver’s license, which serves to prove identity alone, you’d still need to send in another certified document to prove foreign status. If not using a passport, you must submit at least two of the documents listed in the IRS W-7 chart. The documents must be current, verify your identity (that is, contain your name), and support your claim of foreign status. If you submit copies of documents that display information on both sides, copies of both the front and back must be attached to your ITIN application. At least one document must contain your photograph. You may not use expired documents.
A Canadian health card or permanent resident (PR) card are both unacceptable to IRS for ITIN W-7 application; i.e., not for: proof of identity alone, only proof of foreign status alone or proof of both identity and foreign status.
A Canadian health or PR card doesn’t NOT meet IRS's ITIN issuance requirement and specifically isn't viewed by IRS as a National identification card.
A national identity card is a portable document, typically a plasticized card with digitally-embedded information, that someone is required or encouraged to carry as a means of confirming their identity.
An Ontario Photo Card is a wallet sized card that provides government-issued identification to those Ontarians who do not have a driver’s licence, making it easier for them to do things such as open a bank account, and perform any other activities that require official identification.