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Breaking News:  On the afternoon of January 9, 2019, the U.S. Department of Education (ED) released a new Electronic Announcement that provides additional flexibilities in official guidance related to acceptable documentation for verification purposes. 
 
The modified guidance is applicable to the appropriate year’s data related to the student’s Free Application for Federal Student Aid/Institutional Student Information Record (FAFSA/ISIR), for both 2018-2019 and 2019-2020 award years’ data.  Therefore, this new guidance is applicable to 2016 or 2017 income tax returns filed, or those years’ verification of non-filing status, as applicable, for processing both, 2018-2019 and 2019-2020 award years’ data.
 
These additional new flexibilities in what constitutes acceptable documentation are effective as of the date of the Electronic Announcement’s publication, January 9, 2019.
 
The quick take on the new guidance is that signed paper copies of the tax return a taxpayer submitted to the IRS or other appropriate tax authority may be accepted to verify the income and tax return information on the FAFSA/ISIR.  The use of the IRS Data Retrieval Tool (IRS DRT) is still acceptable, as are appropriate tax transcripts from the IRS or other applicable tax authority.  The IRS DRT or tax transcript still provide the most reliable tax return information, in most cases.
 
Those individuals that did not file a tax return and whose data is needed for verification purposes, still must provide a verification of non-filing (VNF) from the IRS or other tax authority.  But, if the individual is unable to obtain a VNF from the IRS, and the institution has no reason to question that the individual made a good-faith effort to obtain the VNF, the institution may accept a signed statement certifying they were not able to obtain one from the IRS, and that they have not filed and are not required to file a 2016 or 2017 income tax return.  In such case, the individual must still provide a listing of the sources of income earned by the individual from work, and the amount of income earned from each source.  Additionally, they must provide a copy of their IRS W-2 forms for each source of employment income in 2016 or 2017, as applicable.
 
For individuals who have filed an application for an extension of time to file their tax returns, they must provide documentation of such application to the IRS and a copy of IRS’ approval for filing beyond the automatic six-month extension for the appropriate year, as well as copies of the W-2 forms for each place of employment for each applicable year.
 
Individuals who do not have a Social Security Number (SSN) or Individual Taxpayer Identification Number(ITIN), or an Employer Identification Number (EIN), will have to provide alternate documentation as described in ED’s Program Integrity Questions and Answers in Q&A DOC-Q29/A29, since an SSN, ITIN, or EIN are required to obtain a VNF from the IRS.
 
For more details, please review the January 9, 2019, Electronic Announcement on IFAP.ed.gov.
 
Should you have any questions regarding the information in this edition of our “Breaking News” DYK, please feel free to contact FAME Customer Service through the Client Solution Center.

This material is presented for informational and educational purposes only and should not be considered to be giving legal advice.