The IRS has decided that penalties for colleges, universities and other educational institutions that filed Forms 1098-T with incorrect or missing taxpayer identification numbers will be waived for tax years 2012, 2013 and 2014.
A Form 1098-T, Tuition Statement, is a form prepared by various eligible educational institutions that lists certain information on enrollment, tuition and related expenses, and scholarships. Taxpayers use the information on these forms to prepare their tax returns and claim any of the educational credits for which they may be eligible.
All educational institutions are required to furnish students with Forms 1098-T no later than Jan. 31 of the year following the calendar year for which the returns were required to be made. For example, a 1098-T for 2015 would need to be mailed out to the student no later than Jan. 31, 2016.
When colleges and universities file these 1098-T’s, the IRS requires them to include the name, address and taxpayer identification number (TIN) of every student. Failure to provide this information can result in penalties to the college or university.
A TIN can be either the taxpayer’s Social Security number or a special number assigned to the taxpayer by the IRS. Usually nonresident aliens and others in certain situations are not eligible to apply for a Social Security number. In that case, to allow these individuals to file U.S. tax returns, the IRS provides them with a TIN.
A TIN is obtained by filling out Form W-7, Application for IRS Individual Taxpayer Identification Number.
Many eligible educational institutions have been filing the 1098-T’s with either missing or incorrect TINs. The main reason is that their nonresident students did not apply for, and therefore didn’t have, a valid TIN number. This problem has happened frequently across the country.
The penalty waiver for years 2012 through 2014 is being provided in light of recent legislation that provides relief to educational institutions from future penalties for missing or incorrect TINs if the educational institutions certify under penalty of perjury that they have complied with regulations governing solicitation of payee TINs.
The educational institutions still must properly solicit payee TINs.