Posted Date:February 23, 2017
|Author:||Jeff Baker, Director, Policy Liaison and Implementation, Federal Student Aid|
Subject: Verification - IRS Documentation Requests, Uses, and Messaging
Attached to this Electronic Announcement is a chart that shows the methods by which a taxfiler can request and receive verification documents from the IRS. The chart provides information about the verification documents that can be requested from the IRS, the IRS document or response that will result from each request, where the response will be sent, and an estimate of the time for the IRS to respond to the request.
The attached chart identifies four types of documents that are used for FAFSA verification:
Tax Return Transcript
Record of Account
As a reminder a Tax Return Transcript and the Record of Account can be used to verify the following income and tax information of IRS tax return filers:
- Adjusted Gross Income (AGI)
- Taxes paid
- Education credits
- IRA deductions
- Tax-exempt interest income
- Untaxed IRA distributions, and
- Untaxed pension
Tax Account Transcript
The Tax Account Transcript provides “basic data” from the tax return, as well as amended tax return data, but it may not include all of the information that is on a Tax Return Transcript or a Record of Account. Thus, for tax filers who filed an amended tax return, one way that verification may be completed is with both a Tax Return Transcript and a Tax Account Transcript. It is also possible to complete verification for such a tax filer with only their Record of Account. However, the Record of Account may be complicated to read and difficult to interpret.
Wage & Income Transcript (IRS Form W-2 documentation)
A Wage & Income Transcript may need to be requested if a nontax filer is unable to provide copies of IRS Form W-2.
IRS Form W-2 or Wage & Income Transcripts can be used to verify income earned from work for nontax filers. Nontax filers selected for verification must also provide supporting documentation for verification of nonfiling.
Verification of Nonfiling
IRS documents that clearly indicate that the IRS does not have a tax return record on file for the tax year are acceptable for verification of nonfiling. This includes a Tax Return Transcript or a Tax Account Transcript that includes a message such as “no record of return filed” or “no transcript on file”. See below for more information on “messaging”.
Some IRS documents may state that the request cannot be completed because there is a tax return on file. In these cases, the individual should request a Tax Return Transcript.
As previously stated, a Tax Return Transcript and a Tax Account Transcript that includes a message such as “no record of return filed” or “no transcript on file” is acceptable documentation for verification of nonfiling because these IRS documents clearly indicate that the IRS does not have a tax return record for the requesting individual for the relevant tax year.
Important: Some IRS documents, including tax transcripts, may include a message that indicates that the request “could not be processed”, or the “request could not be honored”. Any IRS document with such unclear messages is not acceptable documentation for verification of nonfiling. The individual should follow the instructions provided by the IRS to obtain further documentation that provides a clear and precise message.
IRS Form 13873
In some instances, instead of providing the requested document, the IRS may provide the taxfiler an IRS Form 13873. There are several versions of IRS Form 13873 (e.g. 13873-T, 13873-V, etc.). Any version of IRS Form 13873 that clearly states that the form is provided to the individual as verification of nonfiling or that states that the IRS has no record of a tax return is acceptable documentation of nonfiling.
IRS Form 13873 may also be provided by the IRS for a number of other reasons and may contain messaging that is nonspecific to the IRS document request. We have been told by the IRS that Form 13873 may also be used to communicate to the individual that the IRS is unable to fulfill the document request because the request itself was incomplete or included inaccurate information. In these cases, the individual should follow the instructions provided by the IRS to obtain further documentation that includes a clear and precise message.
Institutions should thoroughly review any IRS Form 13873 to ensure that the messaging and information provides a clear response to the documentation request and satisfies documentation requirements for verification.
Although this guidance is not limited to just 2017-2018, for additional information, institutions should review the April 1, 2016 Federal Register notice and Dear Colleague Letter GEN-16-07, posted on April 5, 2016, which provides the 2017-2018 information that must be verified for students selected for verification and acceptable documentation for these requirements. Institutions should also review the January 12, 2017 Electronic Announcement that provides a guide for interpreting the IRS Tax Transcript.
If you have any questions about the attached chart, please contact our Research and Customer Care Center staff. Staffs are available Monday through Friday between the hours of 9:00 AM and 5:00 PM (Eastern Time) at 1-800-433-7327. After hours calls will be accepted by an automated voice response system. Callers leaving their names and phone numbers will receive a return call the next business day. Alternatively, you may email the Care Center at firstname.lastname@example.org.