At Issue

Many colleges have received IRS penalty notices over the past few years for incorrect or incomplete tax identification numbers (TINs) for students. In late 2015, the IRS and Congress provided some relief.

Situation

Denali Christian College (DCC) is a nonprofit organization under Internal Revenue Code section 501(c)(3) and section 170(b)(1)(A)(ii). DCC began receiving IRS penalty notices in 2013 concerning missing Taxpayer Identification Numbers (TINs) on their 2012 Form 1098-T, Tuition Statement filings. We worked with them to write several letters to the IRS attempting to show that DCC had properly requested and used reasonable methods to try and obtain the student TINs and to clarify these penalties. In 2015, we were able to tell them that relief was in sight.

Rules

First, we’d like to thank NACUBO for their tireless work on this issue – Great Work!

From the IRS website:
For Colleges and Universities: IRS Waives Penalties for Missing or Incorrect Taxpayer Identification Numbers

The IRS is waiving penalties assessed against any college, university or other educational institution for Forms 1098-T that were filed with an incorrect or missing taxpayer identification number (TIN). The IRS is granting this relief for tax years 2012, 2013 and 2014.

Relief for these three years is being given in light of recent legislation that provides relief to educational institutions from future penalties for missing or incorrect TINs if the educational institution certifies under penalty of perjury that it has complied with regulations governing solicitation of payee TINs. Although this legislation permits this certification, it does not remove the requirement to properly solicit payee TINs.

For tax year 2012, each educational institution that was previously assessed such penalty will receive a letter from the IRS informing them of the IRS’ decision. Affected institutions that do not receive a letter by Oct. 1, 2015, should respond to the IRS using the original penalty assessment notice. The IRS is not assessing penalties for incorrect or missing TINs for tax years 2013 and 2014.

Page Last Reviewed or Updated: 28-Aug-2015

In a recent Capin Crouse eQuery quick survey, 37% of respondents told us that they had received this type of penalty notice in the past three years. This “relief” would appear to be great news for those schools that have been going through the administrative/bureaucratic headache of arm-wrestling the IRS on this issue.

Bottom Line

If you are a part of the “37%”, you should have received a letter from the IRS last fall letting you know that the 2012 penalties were abated.  In addition, the recently passed PATH Act of 2015 contains a provision for “TIN penalty relief” for 2015 Form 1098-T filings. However, there are some codicils. Check with your tax advisor – or us – for more information.

Specific questions? Email Dave Moja.

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.