IRS extends relief for Form 1098-T filer penalties

In Announcement 2016-42, the IRS said that it would extend relief from penalties under Sections 6721 and 6722, related to information reporting, for qualified educational institutions required to report on Forms 1098-T, “Tuition Statement.” The relief from penalties applies to amounts to be reported on Forms 1098-T for the 2017 calendar year, and relief previously granted in Announcement 2016-17.

Specifically, if an eligible educational institution reports the aggregate amount billed for qualified tuition and related expenses on Form 1098-T, rather than the aggregate amount of payments received, the IRS will not impose penalties for the misfiling. Congress changed the reporting requirements as part of the Protecting Americans from Tax Hikes (PATH) Act of 2015 to require reporting of the amounts paid, rather than the amounts billed.

The IRS said that its decision to extend relief was the result of educational institutions informing the government that the PATH Act changes could not be implemented in a timely way, despite their best efforts. To report the amount of payments received for calendar year 2017, eligible educational institutions must adopt a new payment application methodology beginning Jan. 1, 2017. Software vendors do not have a solution in place yet, according to the IRS.

Contacts David Auclair
National Managing Principal, Washington National Tax Office
+1 202 521 1515

Shamik Trivedi
Manager, Washington National Tax Office
+1 202 521 1511

Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.