Posted Date:July 10, 2009
Author: William Leith, Service Director, Program Management, Federal Student Aid
Subject: IRS Skip Trace Service for FFEL Program Guaranty Agencies (Updated on August 7, 2009)
Note: On August 7, 2009, we updated this announcement by removing one attachment, replacing one attachment, and making some minor conforming and clarifying revisions to the text of the announcement.
Attachment Removal - We removed the attachment titled "Enclosure 1: Input/Output File Layout for Exchange of Files Via SAIG" in order to research and evaluate questions we received regarding the file layout information. We will re-post the file layout information as soon as we complete this work.
Attachment Replacement - We replaced the attachment titled "Enclosure 2: Annual Certification" with a revised version that accurately reflects the purpose for which the information secured through the IRS Skip Trace Service will be used. Specifically, this information may only be used for the purpose of locating borrowers who are in default on repayment of their FFEL Program loans.
Text Revision - We made some minor revisions to the text of this announcement. These revisions reflect the updates we made to the attachments and clarify that the Safeguard Procedures Report must be submitted per the instructions in this announcement by August 31, 2009.
We have completed work to improve borrower locate assistance and are ready to resume our matching program with the Internal Revenue Service (IRS). We refer to our borrower locate assistance as the IRS Skip Trace Service. This announcement explains the new process for guaranty agencies in the Federal Family Education Loan (FFEL) Program that wish to use the service.
The IRS Skip Trace Service assists guaranty agencies in the location of FFEL Program borrowers who are in default on the repayment of their FFEL Program loans. We utilize the IRS Skip Trace data to provide taxpayer addresses of defaulted borrowers to guaranty agencies. The data is extracted monthly from the IRS Individual Master File at its National Computer Center. The data on the IRS files is updated weekly as new information is received about a taxpayer. The major update of all IRS files based on the latest annual tax return is usually accomplished by July of each year.
A guaranty agency subscriber to this service must submit requests in the form of an electronic file via the Student Aid Internet Gateway (SAIG). A request for the skip trace service must be submitted during the last two weeks of the month. We use the first four characters of the last name and the complete social security number (SSN) for the skip trace match. These data elements must be provided in a request for the skip trace service. In the near future, we will post details regarding the file layout for the submission and receipt of electronic files via the SAIG.
Note: The IRS Skip Trace Service is not currently available to schools that participate in the Federal Perkins Loan Program.
IRS Skip Trace Service Participation Requirements for Guaranty Agencies
The requirements that a guaranty agency must meet to participate in the IRS Skip Trace Service are as follows:
Be an active participant in the FFEL Program
Have a Guaranty Agency Code (a unique identifier assigned by the Department of Education)
Have an SAIG mailbox
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Enroll in the IRS Skip Trace Service process using the SAIG enrollment at www.fsawebenroll.ed.gov
Submit a Safeguard Procedures Report per the instructions in this announcement by August 31, 2009
A guaranty agency is not required to use the IRS Skip Trace Service. Nonetheless, we strongly encourage guaranty agencies to use this service. The IRS Skip Trace Service is one of most powerful tools available for locating defaulted borrowers and is provided at present, free of charge.
If a guaranty agency elects to participate in this service, it will receive a Federal IRS Skip Trace Address Report. We will submit the skip trace request file to the IRS on the first Monday of each month. The IRS data will be returned to us by the following weekend. IRS files will be processed, and the address data will be sent to the requestors on or about the 15th of each month. The total processing time is approximately three weeks from the time the input is received until the results are returned.
If an SSN and name match is complete, the latest street address, post office box number, or other address, city, state, and zip code furnished to IRS by the taxpayer will be provided. The zip code is the five-digit code assigned by the U.S. Postal Service. Two zeroes (00) in the last positions indicate that the area code (the first three digits) could be obtained, but zone could not. Zeroes in all five positions indicate that the city or town could not be located in the Zip Code File maintained by the IRS.
We will not process requests for Federal Tax Return Information (FTI) from entities other than the principal guaranty agency subscriber. It is not acceptable for loan servicing centers to submit skip trace requests on behalf of a guaranty agency. The principal subscriber must perform the proper certification of safeguard reports. Under appropriate safeguards, FTI may be furnished to servicers, but only the principal subscribers involved may request it.
Safeguard Procedures Report, Safeguard Activity Report, and Annual Certification
To participate in the IRS Skip Trace Service, a guaranty agency must submit a Safeguard Procedures Report to us. In addition, the guaranty agency must provide us with an annual Safeguard Activity Report (an update to the Safeguard Procedures Report) and an annual certification by August 31st of each year thereafter. Each report is described below.
Safeguard Procedures Report
The Safeguard Procedures Report is a complete description of how a guaranty agency will process the FTI and the safeguards it has established to prevent unauthorized disclosure or use of the information. A detailed description of the report is contained in Section 7.0 of IRS Publication 1075, Safeguards for Protecting Federal Tax Returns and Return Information. The attachment to this announcement titled "Enclosure 3: Supplemental Instructions for Safeguard Procedures Report" provides additional report preparation instructions.
Safeguard Activity Report
In order to maintain eligibility in the IRS Skip Trace Service, a guaranty agency must submit an annual update to the Safeguard Procedures Report called a Safeguard Activity Report. This report describes any changes that have occurred since the guaranty agency last reported and anything that could be demonstrative of safeguard efforts and/or awareness. The attachment to this announcement titled "Enclosure 4: Safeguard Activity Report" provides additional report preparation instructions.
Annual Certification
An individual identified as the "Responsible Official" must certify that the information obtained thru the IRS Skip Trace Service will be used in accordance with the provisions of the Internal Revenue Code (26, section 7213 and section 7431). The attachment to this announcement titled "Enclosure 2: Annual Certification" provides the certification statement.
The Safeguard Procedures Report and Safeguard Activity Report are due no later than August 31st of each year. This announcement and its attachments are the authoritative source for the report requirements until such time as it is necessary to post an update on the Information for Financial Aid Professionals (IFAP) Web site. Participants that fail to submit the reports will be removed from the IRS Skip Trace Service for the coming year. Re-entry into the service will require submission of the entire Safeguard Procedures Report or Safeguard Activity Report again.
A guaranty agency may have a servicer/contractor prepare Safeguard Procedures Report and Safeguard Activity Report; however, the reports must be prepared according to the standards in attachments to this announcement titled "Enclosure 3: Supplemental Instructions for Safeguard Procedures Report" and "Enclosure 4: Safeguard Activity Report." In addition, the reports must be signed by an authorized official of the guaranty agency. The servicer/contractor must also file reports for their facilities in accordance with these requirements.
Once completed, mail the reports and annual certification via the U.S. Postal Service to the following address:
U.S. Department of Education
IRS Skip Trace Service
P. O. Box 4132
Greenville, TX 75403-4132
Note: Commercial carriers such as Federal Express and United Parcel Service cannot deliver to the above address.
Contact Information
If you have questions regarding these procedures, contact Theon Dam at 202/ 377-3106 or theon.s.dam@ed.gov.
Enclosure 1: Removed on August 7, 2009 for research and evaluation