Legislation Eases 1098-T Penalty Enforcement

A provision tucked into the final fast-track trade authority legislation approved by Congress last week included language that would establish a safe harbor from Internal Revenue Service (IRS) penalty notices for missing Taxpayer Identification Numbers (TIN), according to a National Association of College and University Business Officers (NACUBO) news release. The measure would also require certain taxpayers claiming education tax benefits to possess a valid 1098-T.

Federal regulations require colleges and universities to annually submit to the IRS Forms 1098-T 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, similar to a bill introduced in May by Sen. Dan Coats (R-IN), declares that the IRS will no longer penalize institutions that comply with the IRS standards for obtaining the required TINs.

The provision, which goes into effect for statements furnished after December 31, 2015, specifically states: "No penalty shall be imposed under section 6721 or 6722 solely by reason of failing to provide the TIN of an individual on a return or statement required by section 6050(S)(a)(1) if the eligible educational institution required to make such return contemporaneously makes a true and accurate certification under penalty of perjury (and in such form and manner as may be prescribed by the Secretary) that it has complied with standards promulgated by the Secretary for obtaining such individual's TIN."

According to NACUBO, the legislation does not require any changes in current Form 1098-T processing requirements for institutions. Under current regulations, colleges and universities are not required to provide a form to students taking noncredit coursework. Doing so would introduce significant new reporting burdens. The new legislation specifically provides for the exceptions "provided by the Secretary" in current regulations governing the processing of IRS Forms 1098-T.

However, since possession of a 1098-T was previously not a requirement for students, the recently-approved measure requires a new level of substantiation for most taxpayers attempting to claim an education credit.


Related Links

National Association of College and University Business Officers News Release