Vernoia, Enterline + Brewer, CPA LLC

universityThe IRS has provided penalty relief to educational institutions that provide Form 1098-T, Tuition Statement, to students and the IRS for the 2015 calendar year, where the Form 1098-T is missing the student’s taxpayer identification number (TIN) or has an incorrect TIN. The relief is not available to others, such as insurers, who file Form 1098-T, or to servicers of student loans, who must provide Form 1098-E student loan interest.

Higher education institutions must provide taxpayers with statements of qualified tuition and related expenses either paid to the institution or billed by the institution. The statement must include the TIN of the student. Students or their parents can use the information to claim tax benefits such as the deduction for tuition and related expenses or the American Opportunity Tax Credit. Education institutions may be liable for penalties under Code Sec. 6721 or 6722 if they fail to provide correct and timely statements to the IRS and to the student, respectively.

In 2015 legislation, Congress relieved educational institutions of penalties for filing incomplete or incorrect statements, if they certify that they complied with IRS procedures for obtaining the TINs. This relief applies to statements and returns provided after December 31, 2015. The IRS reported that it has not made the necessary changes to reflect this change in the law. Instead, the IRS will not impose penalties under Code Sec. 6721 or 6722 on an educational institution that timely provides 2015 Forms 1098-T in 2016 with missing or incorrect TINs.

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