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DYK – Verification of Non-filing Tax Status

March 1, 2017
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The U.S. Department of Education (ED) has updated its guidance related to acceptable documentation for verification of non-filing tax status.

Per ED’s February 23, 2017, Electronic Announcement, there are four types of documents used for verification of tax filing data on the FAFSA:

  1. Tax Return Transcript
  2. Record of Account
  3. Tax Account Transcript
  4. Wage and Income Transcript (IRS Form W-2 documentation)

The Electronic Announcement gives, except for the routine Tax Return Transcript, more details about the information contained on, and uses of, these less commonly obtained forms of documentation.

ED does specify that “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 non-filing.”  This may be wording on the document from the IRS such as, “no record of return on file” or “no transcript on file.”  Naturally, if the document requested from the IRS results in a response that the request cannot be completed because there is a tax return on file with the IRS, the taxpayer would then have to request an actual Tax Return Transcript. 

In some cases, the IRS may not provide the requested tax document to the taxpayer.  Instead, the taxpayer may receive Form 13873.  “Any version of IRS Form 13873 that clearly states that the form is provided to the individual as verification of non-filing or that states that the IRS has no record of a tax return is acceptable documentation of non-filing.”  In some cases, this form may state that the taxpayer needs to provide additional or corrected information in order for the IRS to process the taxpayer’s original request for a Tax Return Transcript, etc.  Schools should review this document carefully to see if it may be used for acceptable documentation of non-filing or not.

Further, all messages the IRS includes on the documents received should be reviewed carefully to ensure they meet the standards described above.

Finally, ED provided an attachment to the February 23, 2017, Electronic Announcement that contains a chart illustrating the various types of IRS documentation requests, uses, and messaging.  Schools should review and become very familiar with this tool and print or otherwise keep it handy for ease of reference.

 

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

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