1098-T TIN Penalty Notices

17 Sep 2013 1:53 PM | Anonymous

IRS Sending Penalty Notices for 1098-Ts Without Taxpayer Identification Numbers

If they do not already have students' TINs, the regulations require institutions to annually solicit TINs from enrolled students for whom they need to generate Forms 1098-T. (Institutions do not need to report on continuing education students or nonresident aliens, unless specifically requested to do so.)

 

á        Below is a very helpful update that NACUBO shared with its members via listserve following a conversation with the IRS.

 

á        NAICU will work closely with NACUBO to explore other efforts to provide additional guidance to campuses on this matter. 

 

 

For those of you who have received 972CG notices from the IRS about proposed penalties for missing or incorrect SSNs on 1098-Ts, I've reviewed publications and had an informative conversation with someone at the IRS about what they are looking for in responses in order to waive penalties. What they are looking for is that the failure was due to a "reasonable cause" and that the institution acted in a "responsible manner" (and will going forward).

 

Here are some helpful hints:
 You must respond within 45 days of the date of the notice or ask for an extension.

Think two-page letter describing your practices and procedures for collecting or correcting SSNs/TINs, not a spreadsheet providing information on each individual. It might be good to characterize it by how many fall into certain categories (x are nonresident aliens, y were inadvertent errors in transcribing numbers) if you can but I wouldn't spend an inordinate amount of time on this if you have lots of them.

You do not need to go back and file corrected returns for mismatched names/TINs or incorrect numbers or provide this information to the IRS – just show that you have a process in place to solicit the correct information and update your records so that you won't have the same mismatch data next year. I'm not entirely clear on exactly how they are matching the names, one publication said just first four letters of the last name but the woman I spoke to said full legal name that is on file with social security. You need to ask for the information from the individual in the proper manner, warning that they are required to give it to you (using W9S meets the requirements), but I don't think that you need to coerce them to respond.

Explain how you solicit SSNs/TINs from students at least annually (following the requirements that have been explained in previous posts). If you haven't done this correctly in the past, use the future tense and promise to do so in the future.

I got the sense that they are trying to get people's attention as much as they are trying to collect fines. Proposed fine notices are going to a random sample of institutions, so not everyone will get one this year but it might be your turn next year.

The most helpful publication is IRS Pub 1586.http://www.irs.gov/pub/irs-pdf/p1586.pdf

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