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IRS extends relief for Form 1098-T filer penalties

RFP
Tax Hot TopicsIn 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


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