Congress Eases Enforcement of 1098-T Penalties

During the recent tumultuous debate between Congress and the White House over trade policy, an unrelated provision easing IRS penalties on 1098-T reporting was included in the final language. As previously reported, over the past two years, colleges and universities have been receiving IRS penalty notices for failing to provide adequate student tax identifiers like Taxpayer Identification Numbers (TINs) or Social Security Numbers (SSNs). The provision included in the trade bill will ease the enforcement of the penalties.

NAICU worked closely with the National Association of College and University Business Officers (NACUBO) and others in the higher education community to provide guidance to our schools while they responded to the penalty notices, in addition to advocating for the elimination of the penalties. The trade bill was sent to the President on June 25, and the new law states that no penalty shall be imposed for failing to provide the TIN of an individual on a required return, if the educational institution makes a true and accurate certification that it has complied with standards for obtaining an individual’s TIN. In other words, if a college or university can show that it attempted to obtain the identifying TIN or SSN, there will be no penalty assessed on the institution. This is effective for statements provided after December 31, 2015.

In addition to providing a safe harbor from IRS penalty notices for missing SSNs and TINs, the bill language also requires certain taxpayers claiming education benefits to show proof of a valid 1098-T. This requirement was spurred by the release of a report from the Treasury Inspector General for Tax Administration showing over $5 billion paid out in potentially fraudulent filings in 2012, and the news coverage that followed.

For more information, please contact:
Karin Johns