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IRS announces limited penalty relief for filers of Form 1098-T

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Tax Hot Topics - IRS announces limited penalty relief for filers of Form 1098-TThe IRS announced recently that it will not impose penalties under Section 6721 or Section 6722, which are related to information reporting, on eligible educational institutions with respect to Form 1098-T, “Tuition Statement,” required to be filed and furnished for the 2016 calendar year, if the institution reports the aggregate amount billed for qualified tuition and related expenses instead of the aggregate amount of payments received.

The Protecting Americans from Tax Hikes (PATH) Act of 2015 amended Section 6050S(b)(2) to require, beginning in 2016, eligible educational institutions to report the aggregate amount of payments received for qualified tuition and related expenses during the calendar year from, or on behalf of, a student.  Previously, Section 6050S(b)(2) allowed those educational institutions to report either the aggregate amount of payments received or the aggregate amount billed.

In Announcement 2016-17 the IRS announced the penalty relief in response to concerns by eligible educational institutions that implementation of the PATH Act changes would require computer software reprogramming that could not be implemented in time to meet the filing and furnishing due dates for the form for calendar year 2016. Those Forms 1098-T, covering the 2016 calendar year, must be filed by Feb. 28, 2017 (or March 31, 2017, if filed electronically), and furnished to recipients by Jan. 31, 2017.

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