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Business and Policy Areas
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1098-T Box 1 Reporting Will Not be Required Until 2018 Tax Year

November 17, 2016

The Internal Revenue Service has announced that it is extending for an additional year the implementation of the recently enacted requirement for colleges and universities to report amounts paid for qualified tuition and expenses in Box 1 of the Form 1098-T.  

According to Announcement 2016-42, the IRS will not penalize institutions for reporting the aggregate amounts billed for qualified tuition and related expenses on the 2017 Form 1098-T (Box 2) instead of the aggregate amount of payments received (Box 1) as required by the Protecting Americans from Tax Hikes Act of 2015, enacted late last year. In May, the IRS had announced a one-year delay allowing schools to continue reporting amounts billed for 2016 forms.

NACUBO formally requested the delay in an October 17 letter to the IRS, explaining the benefits of requiring colleges and universities to change business practices and accounting systems only after they have a complete and clear understanding of what new tuition reporting methodology will be required under final rules that the Service is currently developing and their software providers have had sufficient time to create and test software that implements the changes.    

Because the IRS and Treasury are engaged in a rulemaking process that could result in further substantial changes to the Form 1098-T, NACUBO urged the IRS to postpone the Box 1 reporting requirement until final rules are published. 

Today’s IRS announcement clarifies that through tax year 2017 (forms filed in early 2018), institutions will continue to have the option of reporting either amounts paid (Box 1) or amounts billed (Box 2) for qualified tuition and related expenses.

Contact

Mary Bachinger
Director, Tax Policy
202.861.2581
E-mail