Attention Educational Institutions: IRS Announces Penalty Relief for 2015 Forms 1098-T

Higher Education|Not-for-Profit|Tax

By Sarah Piot

On January 7, 2016, the Internal Revenue Service (IRS) announced that it will not impose penalties on Form 1098-T, Tuition Statement, filed by eligible educational institutions for the year ended December 31, 2015 solely because an incorrect taxpayer identification number (TIN) was reported or a TIN was missing. 

The Trade Preferences Extension Act of 2015 (Act), signed on June 29, 2015, provided relief for 2012, 2013 and 2014 but was recently amended to include 2015.   The Act provides that an eligible educational institution that contemporaneously certifies, under penalties of perjury, that it has complied with the regulations for soliciting and obtaining the student’s TIN will not be subject to penalties for incorrect or missing TINs.   The IRS is unable to make the necessary form and programming changes to implement this amendment to the 2015 Form 1098-T, but will not impose penalties on timely filed forms.  The Form 1098-T for the year ended December 31, 2015 is required to be filed with the IRS by February 29, 2016 or March 31, 2016 if filed electronically.

We recommend that educational institutions engage in best practices and be diligent in their TIN collection efforts in order to file complete and accurate Forms 1098-T. Under current IRS rules, an educational institution is considered to have acted in a reasonable manner if it solicits a TIN at least once annually from a student who will receive a Form 1098-T.  Documentation of the solicitation and the procedures used should be maintained in the institution’s files.

Contact us if you have questions regarding Form 1098-T and visit our industry group page to learn about service that we offer to colleges and universities.           

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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