— Special Edition — What to do When Your Microwave Quits Working (or, Financial Aid Verification Requirements after IRS was Hacked)
The news reports are out1. The US Internal Revenue Service (IRS) was hacked! This is of specific interest to schools participating in the Title IV Federal Student Aid (FSA) programs. Students and parents who apply for FSA and are selected for “verification” in the application process have potential for being directly impacted due to the hack of the IRS system.
The IRS announced2 on Tuesday, May 26, 2015, that its Get Transcript Web site was hacked between February and mid-May of 2015. It is important to note, however, that the IRS’ main database system was not accessed. Only the Get Transcript system, which is operated separately from the main IRS computer system, was compromised in this attack. The hackers were successful in approximately 100,000 of 200,000 attempts at gaining unauthorized access. The IRS has indicated that it is notifying those tax filers whose information was hacked.
The impact on students applying for financial aid becomes evident for those whose information on the Free Application for Federal Student Aid (FAFSA) is selected for verification. This process, in many cases, includes the student’s and/or parents’ information that is reported on the FAFSA to be documented to be accurate. Most applicants apply by way of the FAFSA on the Web (FOTW) process. When doing so, tax filers are given the opportunity to utilize the IRS’ Data Retrieval Tool (DRT) to transfer data from their IRS tax return directly into the FOTW. For those applicants that are selected for verification who chose not to use the IRS’ DRT or who did not meet the criteria to use the DRT process, the tax filer is required to provide a copy of his or her tax data via a Tax Return Transcript. The most expeditious manner for obtaining the transcript has been by accessing it online through the IRS’ Get Transcript Web site. At that site the tax filer could enter his or her required identifying information and immediately obtain a Portable Document Format (PDF) file of the tax return data necessary for completing verification. Since the IRS’ discovery of the hacking last week, the Get Transcript online option is suspended.
Options to Mitigate the Impact
Those students whose FAFSA information is selected for verification do not currently have the immediate online access to obtain the PDF version of the transcript. As a result of the hacking of the IRS’ Get Transcript site, applicants selected for verification of FAFSA data will have to revert back to a “pre-microwave age” method of providing the required tax return documentation. Similar to when one’s microwave has gone on the fritz at home and you revert to using the stove top for popping corn, there are also options to mitigate the effect of the unavailability of the online access to the Tax Return Transcripts.
What methods are available for students to complete verification if selected in a category of verification that requires documentation of IRS tax data? Tax filers can still obtain a Tax Return Transcript by way of the other means previously outlined by the US Department of Education (ED) in its guidance in various Electronic Announcements, Dear Colleague Letters and the 2015-2016 Federal Student Aid Handbook3. These alternative methods include:
- using the IRS2Go mobile app
- mailing or faxing a paper Form 4506T-EZ. (This form can be downloaded from the IRS Web site and printed to complete and submit.)
- calling the IRS at 1-800-908-9946.
Some schools may also participate in a third-party provided Income Verification Express Service (IVES) that FAME has contracted to make available to client schools. Information FAME has received indicates that the IVES process has not been adversely impacted by the recent hacking of the IRS system. ED has stated that schools may use a transcript obtained via IVES to fulfill verification purposes as long as the school does not have reason to question its authenticity. (Any client who wishes more information on the IVES option available through FAME may contact Rick Rosado, Sales Manager, by e-mail at: rrosado@FAMEinc.com or by telephone at 800-327-5772, ext. 234.)
The best alternative to eliminate worry about obtaining an IRS Tax Return Transcript is for tax filers to utilize the IRS Data Retrieval Tool when completing the FOTW. For those applicants and tax filers who are able to use the DRT, it will negate the need for a transcript in almost all cases. (There may be some rare instance where a school may determine it still needs a transcript even when the DRT is used, but that is not likely.) Therefore, the most expeditious manner for finalizing the financial aid process would be to utilize the DRT when the students are initially completing the FOTW. Additionally, in most cases the DRT process may also be used when making a correction via FOTW.
For more information on the incident related to the hacking of the Get Transcript application, you may read IRS’ statement at http://www.irs.gov/uac/Newsroom/IRS-Statement-on-the-Get-Transcript-Application.
The hacking of the IRS’ Get Transcript application points out the importance of systems security. This instance may be used as an opportunity for schools to also consider the security of their own systems and processes. But, as it relates to students being able to continue in the Federal Student Aid application and/or verification processes, there are alternative means to complete the requirements. The alternatives simply may not be at microwave-age speed.
1 The Washington Post, May 26, 2015 – http://www.washingtonpost.com/blogs/federal-eye/wp/2015/05/26/hackers-stole-=personal-information-from-104000-taxpayers-irs-says/?tid=3Dsm_fb and Fox News, May 26, 2015 – http://www.foxnews.com/us/2015/05/27/irs-says-thieves-stole-tax-info-from-100000/#.VWXHiNkRjlQ.email
2 IRS Newsroom Online, May 26, 2015 – http://www.irs.gov/uac/Newsroom/IRS-Statement-on-the-Get-Transcript-Application
3 2015-2016 Federal Student Aid Handbook – http://ifap.ed.gov/fsahandbook/1516FSAHandbookAVG.html
This material is presented for informational and educational purposes only and should not be considered to be giving legal advice.