Proposed Regulations on Form 1098-T Reporting Will Have Significant Impact on Colleges

Last month, the IRS proposed regulations that, if adopted, would require educational institutions to change the way information is reported on IRS Form 1098-T.  The primary reporting change was originally part of tax and spending legislation passed last year.  However, implementation was delayed for one year to allow college software programs to be updated.

The impact of the proposed regulations will be significant, and will require separate tracking and reporting of information required on the Form 1098-T.  Additionally, the reporting change will require the implementation of business office software updates to enable proper information tracking.  Institutions that have not addressed the software updates, should start assessing their ability to comply with the new reporting requirements immediately.

The proposed regulations would require institutions to report aggregate payments of qualified tuition and related expenses billed for the calendar year. Colleges will no longer have the option of reporting aggregate qualified tuition and related expenses billed. Institutions will be required to report information on Form 1098-T in more specific detail.  This includes separately reporting the specific amounts paid during the calendar year that relates to an academic period that begins in the first three months of the next calendar year - and the number of months that a student was a full-time student during the calendar year.

The proposed regulations would also require educational institutions to issue a Form 1098-T to nonresident aliens, individuals whose qualified tuition and related expenses are paid entirely with scholarships, and individuals whose qualified tuition and related expenses are paid under a formal billing arrangement.

The higher education community will be submitting comments to the IRS on the proposed regulations. Individual institutions are also encouraged to submit comments. Comments can be submitted via the Federal eRulemaking Portal atwww.regulations.gov (reference the regulation number: IRS REG–131418– 14). Electronic comments must be received by October 31, 2016.  The IRS will be holding a public hearing on the proposed regulations on November 30, 2016.  Discussion topics for the hearing must be received by October 31, 2016. 

For more information, please contact:
Karin Johns