Reporting Requirements/Administrative Burden of the Taxpayer Relief Act of 1997

Current Law:

• Institutions are being required ultimately to provide 1099s to those who submit tax returns on behalf of a student indicating what payments have been received by the institution.

• There has been an acknowledged administrative burden placed on institutions of higher education to report data to the IRS to assist them in their administration of components of the Tax Payer Relief Act. Temporary relief was provided to institutions for the 1998 and 1999 calendar years.

Issue:

• Increased costs that the institutions are facing in order to comply with the administration of this are often being passed back to the families in the form of increased tuition. Many schools have chosen third party servicers to do this work for them, which increases costs even further.

• The student is the consumer of educational services. Information is already being collected regarding the student (i.e. social security number, address, etc.) and not the parent who may be filing the tax return. In addition, all critical information is currently sent to the student, including bills, grades and financial aid information. This places the educational institution in a potential position of providing tax advice.

• There is a burden on the institution to collect taxpayer information, which may or may not be custodial parent information in the case of divorced or separated families. The current law only cares about who is claiming the student on the tax return.

• The Internal Revenue Service currently does not track dependent social security information.

Proposed:

• Have the IRS incorporate an additional schedule and/or item on their tax returns to collect the necessary information.

Possible Objections:

• There would be an increased burden on an already over-burdened agency.

Counter Argument:

• At a minimum, continue to only report student information on the 1098T and let the student give the 1098T to the appropriate (filing) parent.