The IRS today released an advance version of Announcement 2016-42 offering limited relief from penalties for eligible educational institutions with respect to the Forms 1098-T required to be filed for the 2017 calendar year under section 6050S.
Announcement 2016-42 [PDF 17 KB] provides notice that the IRS will not impose penalties under section 6721 or 6722 on eligible educational institutions with respect to Forms 1098-T, Tuition Statement, required to be filed and furnished for the 2017 calendar year under section 6050S if the institution reports the aggregate amount billed for qualified tuition and related expenses on Form 1098-T—instead of the aggregate amount of payments received as required by section 212 of the Protecting Americans from Tax Hikes Act of 2015.
The penalty relief is limited to 2017 Forms 1098-T required to be filed by eligible educational institutions by February 28, 2018 (or April 2, 2018, if filed electronically), and furnished to recipients by January 31, 2018. Today’s IRS announcement does not provide penalty relief for any other failure that would cause a filer to be subject to penalties under section 6721 or 6722, or any other penalty under any provision of the Code.
Colleges and universities are required annually to notify students enrolled in degree programs of the costs to attend their institutions of higher learning by furnishing them Forms 1098-T, Tuition Statement.
Form 1098-T provides students with tuition information that can assist them in claiming educational tax credits on their individual income tax returns. Legislation enacted in 2015 affected Form 1098-T by limiting reporting by institutions to the aggregate amount of payments received for qualified tuition and related expenses. However, representatives of educational institutions informed the IRS that despite diligent efforts to meet the new reporting requirement, the necessary changes to accounting systems, software, and business practices cannot be accomplished in time for calendar year 2017.
The IRS granted similar relief for the 2016 calendar year on April 27, 2016. Read TaxNewsFlash-Exempt Organizations
For a more extensive discussion of Form 1098-T, read a March 2016 report [PDF 179 KB] prepared by KPMG LLP.
For more information, contact the Managing Director-in-Charge of KPMG's Washington National Tax Exempt Organizations Tax group
D. Greg Goller | +1 (703) 286-8391 | firstname.lastname@example.org
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