Additional Guidance on Form 1098-T Reporting

Last month, Congress approved the fast-track trade authority legislation, which included language that would establish a safe harbor from Internal Revenue Service (IRS) penalty notices for missing Taxpayer Identification Numbers (TINs).

The provision relates to federal regulations (§1.6050S) requiring colleges and universities to annually submit Forms 1098-T to the IRS for certain students, with or without a TIN. In 2013, the IRS began penalizing institutions for filing Forms 1098-T with incorrect or missing TINs.

The new legislative language declares that the IRS will no longer penalize institutions that comply with the IRS standards for obtaining the required TINs. The measure does not appear to require any changes in current Form 1098-T processing requirements for institutions.

To view the 2015 instructions for Forms 1098-T, visit http://www.irs.gov/pub/irs-pdf/i1098et.pdf

The current IRS regulations on information reporting requirements for qualified tuition and related expenses do not require schools to provide a Form 1098-T to international students, undocumented students (unless requested by the student), or students taking noncredit coursework.

For additional guidance on collecting TINs for Form 1098-T reporting, see http://www.nacubo.org/Documents/BusinessPolicyAreas/Substitute_W9S_Advisory_Report.pdf

Under the Federal Privacy Act of 1974, institutions may request Social Security Numbers (SSNs)/TINs from students as long as they inform the student whether that disclosure is mandatory or voluntary. If it is mandatory, schools must inform the student of the specific statutory or other authority under which the number is solicited and what uses will be made of it. Institutions are only allowed to require SSNs/TINs for the purposes of processing student loans, employment, and to meet other specific legal obligations.

Basic List of Laws and Regulations Mandating the Collection of SSNs/TINs for Student Financial Assistance (other statutory, regulatory, and legal requirements may apply)

Higher Education Act – 20 U.S. Code § 1091(a) and (p)

This law requires students and parents to provide their SSNs to confirm identity for college and university loan eligibility, grants, and work assistance.

Student Assistance Regulations – 34 CFR 668.32(i) and 34 CFR 668.36

The regulations implementing the Higher Education Act require students to submit SSN on FAFSA, where it is verified with SSA. Student and institution are notified of the confirmation. Institution may not distribute title IV HEA funds to students until satisfied that SSN is accurate.

Student Financial Aid Tax Reporting – 61 U.S. Code § 6109 and IRS Form 1098T, Student Financial Aid

Educational institutions must use student SSNs in reporting financial aid applicants to the IRS. Form 1098T uses the SSN as an identifier. Even if universities and colleges can determine a student’s identity and eligibility for financial aid without the SSN, the institution will need to collect the SSN for IRS Form 1098T.

National Student Loan Data System – 20 U.S. Code § 1092b

This law requires the Secretary of Education to develop a National Student Loan Data System, containing information (including student SSNs, which are used in the log-on process) regarding loans made, insured or guaranteed.

Veterans Benefits – 38 U.S. Code § 5101(c)

Any person, including students, claiming compensation or benefits as a veteran must furnish SSN.

Federal Loans, Debt Collection – 31 U.S. Code 7701(c)

Agencies administering federal loan programs must require applicants to provide taxpayer ID (i.e., SSN), for use in collecting and reporting on any delinquent amounts.