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Myriad Late December Federal Policy Actions Include New 1098-T Requirement

January 8, 2016

On December 18, 2015, President Obama signed into law a $1.1 trillion FY16 omnibus spending bill, which provides funding for the federal government through September 30, 2016. A wide-ranging tax extenders package was combined with the omnibus. The 2,000-page budget bill and 233-page tax bill contain numerous provisions important to the higher education community, with implications for students, families, and institutions.  

A comprehensive summary circulated by NACUBO to Current subscribers is available here. You can also listen to our podcast on the budget and tax changes.


Tax Highlights from the Year-End Deal

  • Implementation of the Cadillac tax—the excise tax on high-cost employer-sponsored health plans that was implemented as part of the Affordable Care Act—will be delayed by two years to 2020, rather than 2018 as originally scheduled.
  • Colleges and universities will no longer have the option of reporting amounts billed on Internal Revenue Service (IRS) Form 1098-T. All institutions will be required to report payments for qualified tuition and related expenses. The change is effective for tax year 2016 forms.
    NACUBO recognizes the challenges ahead due to this change. We have  alerted policymakers that an educational institution's calculation of amounts paid for qualified tuition and related expenses on Form 1098-T may not correspond with amounts taxpayers claim on their tax returns for a number of reasons related to timing of payments and application of funds. The IRS will need to use its regulatory authority under Section 6050S to provide guidance to educational institutions on implementing this change. NACUBO will share additional information as it becomes available.
  • The filing date for employers to submit information returns (Forms W-2 and 1099-MISC) to the IRS will be accelerated to January 31, effective for 2016 forms filed in January 2017.   

Perkins Loan Program Agreement

Lawmakers also enacted H.R. 3594, the Higher Education Extension Act of 2015, in late December. The law allows current and new undergraduate borrowers to receive new Perkins Loans through September 2017 and additional disbursements of loans through the 2017-18 school year. For current borrowers, Perkins Loans are available only after exhausting their subsidized Federal Direct Stafford Loan eligibility. New borrowers may receive Perkins Loans after exhausting both their subsidized and unsubsidized Direct Loan eligibility. The legislation also adds additional disclosures so borrowers stay aware of the status of the Perkins Loan program. See the NACUBO website for additional guidance on preparing for the future of the Perkins Loan program.

NACUBO Joins Comments in Opposition to IRS Gift Substantiation Regulation

In response to a regulation proposed by the IRS that would require charitable nonprofits to collect and report donors’ Social Security numbers, NACUBO joined more than 200 other nonprofit organizations in a letter warning that the proposed regulation “would expose the public to increased risk from identity theft, impose significant costs and burdens on nonprofit organizations, and create public confusion and disincentives for donors to support the work of nonprofits.”

The IRS responded swiftly and on January 8, 2016, posted notice in the Federal Register that proposed rule was being withdrawn.

NACUBO Responds to Recently Proposed EPA Hazardous Waste Rules

NACUBO, together with three other higher education associations, responded to recently proposed hazardous waste generator rules published by the Environmental Protection Agency (EPA). NACUBO’s letter expressed concern that several provisions in the proposed rules will adversely affect colleges and universities and urged the EPA to consider allowing additional flexibility for academic institutions.

NACUBO Joins Comments on Obamacare Student Health Insurance Regulations

The American Council on Education, joined by NACUBO and eight other higher education associations, sent a letter on December 21 to the Center for Medicare and Medicaid Services on its proposed rule concerning the application of the Affordable Care Act to institutions offering student health insurance coverage. The letter is largely supportive of recently proposed rules, with some caveats expressing concerns about cost implications.

Contact

Liz Clark
Director, Federal Affairs
202.861.2553
E-mail