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Business and Policy Areas
Business and Policy Areas
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1042-S Questions Remain as Scrutiny Intensifies

May 2, 2016

To date, attempts by students, institutions, NACUBO, and others to seek clarification from the IRS have shed little light on the rationale for the current tax woes faced by international students and scholars at U.S. colleges and universities.

Over the past several months, NACUBO has learned that thousands of international students and scholars at U.S. colleges and universities are being denied tax refunds or assessed tax bills. NACUBO has sought resolution to the problem, working with individual colleges and universities, the IRS, and third-party processors.

In her April 15 testimony before the House Subcommittee on Government Operations, National Taxpayer Advocate Nina Olson's stated, "most problems appear to be caused by a software error in the Form 1042-S preparation programs used by the universities and colleges. However, in at least some of these cases, it appears that the mismatches may themselves be the result of the IRS shifting data fields on the students' tax returns."

Yet, repeated requests to the IRS for information about the specific nature of software errors remain unanswered. 

On April 22, Rep. Lloyd Doggett (D-TX) wrote to IRS Commissioner John Koskinen asking for information and an expeditious resolution. Doggett specifically asked, "How is the IRS handling the notices of levy that are being routinely issued to students whose refunds were denied? What action will it take to coordinate a response and communicate it to the schools affected?"

On April 26, NACUBO's representative to the Information Reporting Program Advisory Committee (IRPAC) Joel Levenson, from the University of Central Florida, again raised the issue for IRS leadership during IRPAC meetings.

At the IRPAC meeting, Levenson urged the need for the IRS to be forthcoming as to the causes of the mismatches on Forms 1042-S, because institutions have generally been unable to find or pinpoint errors on their end and, more importantly, students have no ability to respond to or correct a problem they cannot see. He stressed the immediacy of finding resolution for the thousands of students awaiting refunds.

NACUBO's efforts remain focused on the following:

  1. Identifying the root cause of the current problem(s) international students are facing so that institutions and service providers can respond appropriately.
  2. Finding workable solutions for students to quickly come to resolution with the IRS.

Contact

Mary Bachinger
Director, Tax Policy
202.861.2581
E-mail

Liz Clark
Director, Federal Affairs
202.861.2553
E-mail