With all the hubbub over “Box 1 only” filing for Form 1098-T, don’t forget about the rules about your procedures for obtaining TIN’s from your students – and reporting or showing reasonable cause for not reporting.
Troas Bible College (TBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). They are required to file Form 990 annually.
TBC called us in a panic over an IRS notice they just received for $8,580 with regard to their 2016 Form 1098-T filing. The IRS was charging $260 each for 33 students for which TBC – apparently – did not provide taxpayer identification numbers on the electronically filed forms.
“Did you check the box on the Form 1098-T certifying that you solicited the TIN’s in good faith?”
“What box?” They replied.
“Ahh,” we say.
For 2016, the IRS added an unlabeled “checkbox” to Form 1098-T. The box resides in the unnumbered line item labeled, “STUDENT taxpayer identification no.” For any student for which you do not report a TIN, this box should be checked – presuming your institution, in good faith, complied with the rules prescribed for making a solicitation in writing to obtain TIN’s from your students.
From 2018 Form 1098-T Instructions:
Student’s TIN and checkbox. Enter the student’s TIN, as provided to you on Form W-9S, Request for Student’s or Borrower’s Taxpayer Identification Number and Certification, or other form. If you solicited the student’s TIN in writing (Form W-9S or other form) for the current year, check the box. Also check the box if you obtained the student’s TIN in a prior year by making a solicitation in writing (Form W-9S or other form) or you obtained the student’s TIN in a prior year from his or her financial aid application or other form and in either case have no reason to believe the TIN previously obtained is incorrect. Check the box if the institution is filing the Form 1098-T with nothing in the field for the student’s TIN because the institution has no record of a TIN, but only if you made a written solicitation for the TIN on or before December 31 of the year for which you are filing the Form 1098-T. By checking the box and filing Form 1098-T with the IRS (for electronic filers), you certify under penalties of perjury that you have in good faith complied with the standards in Treasury Regulations section 1.6050S-1 governing the time and manner of soliciting the TIN of the student. Filers who transmit paper forms to the IRS will make such certification by signing Form 1096 in conjunction with filing the returns with the boxes checked in the fields designated for the student’s identification number.
From Treasury Regulation 1.6050S-1(e)(3)(iii):
(iii) Manner of soliciting TIN. An institution or insurer must request the individual’s TIN in writing and must clearly notify the individual that the law requires the individual to furnish a TIN so that it may be included on an information return filed by the institution or insurer. A request for a TIN made on Form W-9S, “Request for Student’s or Borrower’s Taxpayer Identification Number and Certification,” satisfies the requirements of this paragraph (e)(3)(iii). An institution or insurer may establish a system for individuals to submit Forms W-9S electronically as described in applicable forms and instructions. An institution or insurer may also develop a separate form to request the individual’s TIN or incorporate the request into other forms customarily used by the institution or insurer, such as admission or enrollment forms or financial aid applications.
From NACUBO Advisory Report 2014-1:
In order to comply with Internal Revenue Service (IRS) requirements to report tuition payments and other information on Form 1098-T, higher education institutions need to collect students’ taxpayer identification numbers (TINs). For most students, their TIN is their Social Security number (SSN). Students who are not eligible for an SSN may have an individual taxpayer identification number, known as an ITIN.
To avoid being subject to fines for failure to report correct TINs on Form 1098-T, institutions must solicit any missing TINs:
- at least once a year
- in writing
- with a clear notice that the individual is required by law to provide the TIN so that it may be included on an information return
- The “buzz” on Form 1098-T these days – and rightly so – is the requirement for “Box 1 only” reporting.
- In addition, institutions should be aware of the requirements for making a “good faith effort” to obtain student TIN’s.
- Make sure your team is aware of the unlabeled “check box” on Form 1098-T that should be checked for any student for which a TIN is not reported.
- Do you have procedures in place to solicit TIN’s in alignment with Treasury Regulations?
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.
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