The Internal Revenue Service (IRS) has announced that it will not penalize institutions for reporting the aggregate amount billed for qualified tuition and related expenses (Box 2) on 2016 Form 1098-T instead of the aggregate amount of payments received (Box 1) as required by the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), enacted late last year.
Announcement 2016-17 gives breathing room to the vast majority of colleges and universities that currently report amounts billed (Box 2) and do not yet have the software solutions in place needed to implement Box 1 reporting beginning in January 2017, as mandated by the PATH Act.
Schools are required to issue Form 1098-T each year to their students. For more than a decade, colleges and universities have had the option of reporting either the aggregate amount billed or payments received for qualified tuition and related expenses. Most institutions have historically opted to report amounts billed.
On December 18, 2015, the Consolidated Appropriations Act amended the Internal Code, eliminating the option for colleges and universities to report amounts billed for qualified tuition and expenses in Box 2 of IRS Form 1098-T. The new requirement took effect January 1, 2016.
NACUBO is grateful to those institutions that reached out directly with their own letters and messages to the IRS, asking for this relief. Special thanks goes to members of the NACUBO Student Financial Services and Tax Councils, who have worked tirelessly on all matters related to Form 1098-T and on shaping NACUBO's advocacy efforts.
There is no word yet on timing, but at some point the IRS will propose guidance governing institutional reporting requirements that NACUBO anticipates will address some of the transitional concerns expressed in John Walda's February 29 letter. NACUBO's discussions with IRS and Treasury officials continue as they seek to develop rules in this area. We will keep you posted on further developments.