kcjenkins Posted January 8, 2016 Report Share Posted January 8, 2016 by Michael Cohn January 7, 2016 The Internal Revenue Service is giving educational institutions a pass if they fail to include the correct taxpayer identification number on a student’s tuition statement form. Announcement 2016-03 provides notice that the IRS will not impose penalties under section 6721 or 6722 on eligible educational institutions required to file Forms 1098-T, Tuition Statement, for the 2015 calendar year, solely because they fail to include a student’s correct TIN on Form 1098-T. There are some caveats. The IRS noted that the announcement is limited to 2015 Forms 1098-T required to be filed by eligible educational institutions by Feb. 29, 2016, or March 31, 2016 (if filed electronically). The IRS is not providing penalty relief for any other failure that would cause a filer to be subject to penalties under section 6721 or 6722, or any other penalty under any provision of the Tax Code. The penalty relief comes in response to a provision in the Trade Preferences Extension Act of 2015, which eliminates penalties against educational institutions solely for failing to include an individual’s TIN on a Form 1098-T or a related statement if the institution contemporaneously certifies under penalties of perjury that it has complied with the required standards for obtaining an individual’s TIN. Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted January 9, 2016 Report Share Posted January 9, 2016 I read in Journal of Accountancy that colleges will be require to complete the tuition paid box on the 1098-T starting in 2016. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted January 9, 2016 Author Report Share Posted January 9, 2016 That is correct. Quote Link to comment Share on other sites More sharing options...
SaraEA Posted January 10, 2016 Report Share Posted January 10, 2016 The 1098T has been a problem ever since it was introduced. Remember when it first came out all the schools had to fill in was the full-time student box? The rest of the form was blank. Now all they've been filling out is the "amount billed." Means nothing. The IRS has audited lots of our clients, asking for proof of amount paid. When the clients request their record of account from the school, guess what? They often didn't pay the amount billed within the calendar year and owe some tax. It's about time the schools have to fill in all the boxes. My question is why the heck did it take so long? I can't guess why the IRS issued a form and for years hasn't required it to be completed in its entirety. This has led to a lot of audit letters and wasted IRS resources and wasted tax pro time and cost taxpayers interest. (Silly them, they trusted the official form.) 5 Quote Link to comment Share on other sites More sharing options...
jklcpa Posted January 10, 2016 Report Share Posted January 10, 2016 One of the most useless forms ever. 2 Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted January 10, 2016 Report Share Posted January 10, 2016 We have clients who have kids in colleges that REFUSE to issue 1098-T citing some rule about not required to, if the scholarships exceed the amounts billed. Colleges' apathy and carelessness are as much to blame for all the mess as the inconsistency of the IRS about this. 4 Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted January 10, 2016 Author Report Share Posted January 10, 2016 19 hours ago, SaraEA said: The 1098T has been a problem ever since it was introduced. Remember when it first came out all the schools had to fill in was the full-time student box? The rest of the form was blank. Now all they've been filling out is the "amount billed." Means nothing. The IRS has audited lots of our clients, asking for proof of amount paid. When the clients request their record of account from the school, guess what? They often didn't pay the amount billed within the calendar year and owe some tax. It's about time the schools have to fill in all the boxes. My question is why the heck did it take so long? I can't guess why the IRS issued a form and for years hasn't required it to be completed in its entirety. This has led to a lot of audit letters and wasted IRS resources and wasted tax pro time and cost taxpayers interest. (Silly them, they trusted the official form.) Yes, often they know the cost of the most recent semester, and take that times 2, rather than dig out the checks or charge card statements, not realizing that it's often in different years, and/or varies from semester due to different classes requiring different costs for labs or such. The school has all that already, by student, so they should, at today's inflated rates, be required to provide it. 2 Quote Link to comment Share on other sites More sharing options...
SaraEA Posted January 11, 2016 Report Share Posted January 11, 2016 I'm talking about the amounts reported on the 1098T. Client brings the form in, it has the amount billed in box 1, and that's what we've relied on, foolishly it turns out. Many of our clients pay upwards of $30k for tuition, and interestingly these have not been audited (a few exceptions for ones who also took money out of 529 plans). We have had multiple audits of clients who paid $10k or less. Has anyone else noticed this? I have read that education credits have been an IRS target for the past couple of years, and we can attest to that in our office. They could have saved their and our time by requiring the schools to fill out the complete form from the beginning. C'mon, the records are computerized so it can't be that much of a burden. Can anyone surmise why this wasn't mandated from the get go? Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted January 11, 2016 Report Share Posted January 11, 2016 I don't think they worry about 1098Ts with 30k billed, because they know the education credits/deductions have such low limits. They probably assume, like I do, that the taxpayer definitely paid at least 4K, unless it was all paid with scholarships. It's the 1098Ts with 5K in tuition that may be claiming too much credit/deduction. 2 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted January 11, 2016 Report Share Posted January 11, 2016 I have always asked my clients to get the student's account from the bursar with dates, amounts, etc. Some colleges actually print it out on the back of the 1098 or include in the same mailing. In a time pinch I have settled for clients going through their check registers for amounts paid. And, like our Dear Abby says, most of my students are at schools with tuition in the tens of thousands of dollars with little in the way of scholarships, so just checking that the student didn't pay it all himself via student loans is really enough. Except for the last year when tuition was probably paid the previous December.... But, that student at a community college, I really wait for the bursar statement for anyone that might possibly have paid less than $4,000 out of pocket. As a rule of thumb, if tuition is less than $20,000 I need to see a breakout of who paid what and when and how much. See it now or see it later when the IRS letter arrives! 5 Quote Link to comment Share on other sites More sharing options...
jklcpa Posted January 11, 2016 Report Share Posted January 11, 2016 ^^ that, what Lion said! Laughed at this: 35 minutes ago, Lion EA said: like our Dear Abby says 2 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted January 11, 2016 Report Share Posted January 11, 2016 Well, he is a dear and lot better looking than his photo! 1 Quote Link to comment Share on other sites More sharing options...
easytax Posted January 12, 2016 Report Share Posted January 12, 2016 6 hours ago, Lion EA said: Well, he is a dear and lot better looking than his photo! 1 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted January 12, 2016 Report Share Posted January 12, 2016 I think his ears are smaller. Quote Link to comment Share on other sites More sharing options...
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