Transcript Fundamentals of Title IV Administration

Verification
PA Association of Student Financial Aid
Administrators Conference
October 2011
Annmarie Weisman
Training Officer
What is Verification?
…let’s review
• Process by which certain required data
reported on the FAFSA is reviewed for
accuracy and completeness
• Verification regulations at 34 CFR
§668, Subpart E
• Required Verification policies
regulations: 34 CFR § 668.53
2
Required Verification Policies
• Must have written P&P on the following:
– Applicant responsibilities/deadlines for
submitting documents and consequences
of not meeting deadlines
– Method of notifying students of postverification award changes
– Student corrections
– Referring overpayment cases to ED
(More)
3
Required Verification
Policies (cont.)
• Must also give each applicant selected for
verification a written statement explaining:
– Documents required for verification
– Student responsibilities—correction procedures,
deadlines for completing any actions required,
and consequences of missing the deadlines
– Notification methods—how your will notify a
student of resulting award changes, and the time
frame for notification
4
How Are Applicants Selected?
30% option
ends in 11-12
• CPS selection
– Edit checks identify potential
and inconsistencies
– Random selection
• School selection
– School criteria
5
errors
What Documents Do I Need?
• For taxable income,
base year tax return
• For untaxed income
and benefits:
– Official agency
documentation
– Verification worksheet
– Signed statement
• Details on acceptable
documents are listed
in the FSA Handbook
and Federal Register
6
IRS Data Retrieval Process
and Verification
• An institution may consider information
retrieved through the IRS data retrieval
process as acceptable verification
documentation if:
– The Secretary has identified those items as
having come from the IRS and
– The items have not been changed
– IRS Request Flag = 02
7
How Do I Complete the Process?
• Compare the documents with the original
FAFSA information
– May use a checklist in the file
– May use verification tool on FAA Access
• Determine if:
– Information is correct
– Tolerance option may be used
– Corrections must be made
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Verification Tolerance
2011-12 AY
• No recalculation or
reprocessing required if
– no change in non-dollar
items used to calculate
EFC*
AND
– no dollar amount in excess
of $400
2012-13 AY and forward
• No recalculation or
reprocessing required if
– no change in non-dollar
items used to calculate
EFC*
AND
– no dollar amount in
excess of $25
*Remember, some items affect the EFC that are not obvious.
9
Verification Status Codes
• Used when reporting Pell and Direct
Loan payments to COD
V = Verified
S = Selected, but not verified
W = Paid without Documentation
Blank = ISIR not selected by CPS or school
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Interim Disbursements* while
Verification Incomplete
• If a school has no reason to suspect that
application information is incorrect:
– Pell, FSEOG and Perkins: may make one
disbursement for applicant’s first payment period
– FWS: employee may work for a maximum of 60
consecutive days from start of enrollment
– Direct Loans: may originate (but not disburse)
subsidized loans
*TEACH, PLUS, and Unsubsidized
Direct Loans are not subject to
verification/interim disbursements
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Update Applicant Information
• For any student, must always update a
student’s dependency status if it changes
during an award year*
• For students selected for verification, must
always update household size and number in
college at the time of verification*
*Unless the reason is a change in the student’s marital
status (may make this change in 12/13 & forward)
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“Non-Verification” Reminders
• Regardless of verification status
– Must resolve all “C codes”
– Must resolve all conflicting information
• Separate process from verification
• Includes any information of which the school
has knowledge
• Done prior to disbursement
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Verification and
Professional Judgment
Mistaken belief that you must verify to do a PJ…
• If applicant is
selected for
verification (by
CPS or school):
– MUST verify
before
performing PJ
14
• If applicant NOT
selected for
verification:
– Verification
NOT required
– May perform PJ
as usual
Information to Verify
2012-13
15
Verification Guidance
(2012-13 process)
• Dear Colleague Letter (DCL) GEN-11-13
– July 13, 2011 Federal Register details FAFSA
information to be verified for AY 2012-13
– Summarizes the process for AY 2012-13
Citations: 34 CFR §§ 668.51 through 668.61
16
2012-13 Verification Selection
Process and ISIR Flags
• Long-term goal: customized verification
based on applicant info.
– Will identify for a selected applicant only
the info. that requires verification based
upon that applicant’s data
– Current process requires review of items
for all applicants selected for verification
17
2012-13 Verification Process
(cont.)
• Long-term goal: customized verification
– Need more historical FAFSA data to
develop the customized verification model
• ED is not implementing a fully customized
verification process for the 2012-13 AY
• 2012-13 is a variation of the current process
– Analysis will be used to select applicants
with the highest probability of error
18
2012-13 Verification Process
(cont.)
• A SAR/ISIR will include only one verification
flag to indicate selection
– An applicant whose ISIR is so flagged
must verify the info. included in the July 13,
2011 Federal Register
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Information to Verify
2012-13
• Information is to be verified for the
applicant and, if appropriate, his or her
parent(s) or spouse for all applicants
selected for verification:
– # of household members
– # in college
– Food Stamps - if reported
– Child Support Paid - if reported
20
Information to Verify
2012-13
• Item: # of household members
• Documentation: signed statement
• Exceptions: Verification of this item not
required for a dependent applicant when the
marital status of the parent(s) of the applicant
is:
– separated or unmarried (single, divorced, or
widowed) and family size on the FAFSA = 2
– married and family size on the FAFSA = 3
21
Information to Verify
2012-13
• Item: # of household members (cont.)
• Documentation: signed statement
• Exceptions: Verification of this item not
required for an independent applicant when
the marital status is:
– separated or unmarried (single, divorced, or
widowed), and the family size on the FAFSA = 1
– married and the family size on the FAFSA = 2
22
Information to Verify
2012-13
• Item: # of household members enrolled at
least ½ time in eligible post-secondary
institutions
• Documentation: signed statement (or
written document from post-secondary
institution confirming enrollment if requested)
• Exception: Verification not required if # in
college on the FAFSA = 1
23
Information to Verify
2012-13
• Item: Food Stamps - Supplemental Nutrition
Assistance Program (SNAP) - if receipt is
indicated on the 2012-13 FAFSA
• Documentation: copy of document from
providing agency
• Exceptions: None
• No need to verify amount, just receipt of
benefit
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Information to Verify
2012-13
• Item: Child Support Paid - if reported
on the 2012-13 FAFSA
• Documentation: signed statement (or
copy of document from court, person
receiving support, or coordinating
agency if requested)
• Exceptions: None
25
Info. for Tax Filers When
Applicant Selected for Verification
• Adjusted Gross Income (AGI)
• U.S. income tax paid
• Untaxed Income - only the following untaxed
income if reported on the 2012-13 FAFSA –
–
–
–
–
26
Untaxed IRA distributions
Untaxed pensions
Education credits
IRA deductions
Tax exempt interest
Info. for Non-Tax Filers When
Applicant Selected for Verification
• Item: Income earned from work
• Documentation: W-2 form and signed
statement that not required to file and
the sources of the income
• Exceptions: None
27
Less
Burdensome
Verification
Using the IRS Data
Retrieval Process is the
fastest, easiest, and
most secure way to meet
verification requirements
*initially FOTW filing
*FOTW corrections
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IRS Data Retrieval
• Applicants who use the IRS Data Retrieval
Process to transfer their tax return info. and
do not subsequently change the data will be
considered to have verified the applicable
FAFSA info (AGI, taxes paid, and any
applicable untaxed income items)
– Code 02 (IRS retrieval used & data unchanged)
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\
IRS Tax Return
Transcript Required
• A tax transcript is required when:
– the IRS Data Retrieval Process was not used
– the IRS Data Retrieval Process was used, but
data was subsequently changed
– the institution has reason to believe that the data
transferred is inaccurate (no routine requests)
– a married independent applicant and spouse –orthe parents of a dependent student filed separate
tax returns
…but, wait, there’s more…
30
IRS Tax Return
Transcript Required
• A tax transcript is also required when:
– an applicant or applicant’s parent had a
change in marital status after the end of the
tax year (December 31)
– the applicant, or parent, or spouse (as
applicable) filed an amended tax return.
• Signature of tax filer not required on IRS Tax
Return Transcripts
31
Exceptions to IRS Tax
Transcript Requirement
• In limited circumstances, if an institution
determines that obtaining an IRS Tax
Transcript is not possible, the institution may
accept a signed copy of the tax return
– Must document the reason for allowing an
applicant to do so
– Example: tax return from foreign country or
Puerto Rico
32
Interpreting the
IRS Account Transcript
Where are
the line item
numbers?
33
• ED will provide further
guidance to schools on
how to read the IRS Tax
Transcript (locating the
info you need on the
document)
• Stay tuned to ifap!
Where can you find help?
• FSA Assessments
http://ifap.ed.gov/qahome/fsaassessment.html
– Guide to Creating a Policy & Procedures Manual
– Management Enhancement Worksheets
• FSA’s Institutional Improvement Specialists
• FSA Application and Verification Guide, Ch. 4
http://ifap.ed.gov/qahome/fsaassessment.html
Other Resources
• Preamble to the Program Integrity Notice of
Proposed Rulemaking (NPRM) - 75 FR 34825–34834
(June 18, 2010)
• Preamble and Subpart E of the Program Integrity
Final Regulations -75 FR 66902–66913 and 66954–
66958 (October 29, 2010)
• Dear Colleague Letter GEN–11–03
• 2012–2013 ISIR Guide
• 2012–2013 SAR Comment Codes and Text
• 2012–2013 COD Technical Reference
36
School Participation Team (SPT)
Contact Information
The Institutional
Improvement
Specialists
(IISs) are part
of the SPT.
Contact Information
• For follow-up questions about this session,
contact me at:
– Annmarie Weisman, Training Officer
– [email protected]
– 215-656-6456
• To provide feedback to my supervisor:
– Tom Threlkeld, Supervisor
– [email protected]
– 617-289-0144
Your Region III Training Team
• Greg Martin, Training Officer
– [email protected]
– 215-656-6452
• Craig Rorie, Training Officer
– [email protected]
– 215-656-5916
• Annmarie Weisman, Training Officer
– [email protected]
– 215-656-6456
QUESTIONS?
Supplemental
Information
41
Ordering an IRS
Account Transcript—Three Methods
• IRS website
Online • www.irs.gov
• Toll free IRS number
Phone • 1-800-908-9946
• Obtain form online and mail to the IRS
Paper • http://www.irs.gov/pub/irs-pdf/f4506tez.pdf
Ordering an IRS Account Transcript—Method One:
IRS WEBSITE
43
Ordering an IRS
Account Transcript
Heightened Cash Monitoring 2
(HCM2)/Reimbursement
Heightened Cash Monitoring 1
(HCM1)
Advanced Payment
44
Ordering an IRS
Account Transcript online (Steps 1-3)
Step 1:
Click Order a
Tax Return or
Account
Transcript
45
Step 2 :
Click Order a
Transcript
Step 3:
Enter the tax
filer’s
information:
• SSN
• DOB
• Address
Ordering an IRS
Account Transcript online (Steps 4-6)
Step 4:
Click Continue
46
Step 5: Select
Return
Transcript under
the Type of
Transcript field
Step 6: Select the
appropriate year
in the Tax Year
filed (e.g., 2011)
Ordering an IRS Account Transcript—Method Two:
TELEPHONE
47
Ordering an IRS
Account Transcript by Telephone
Step 1:
Call the IRS at
800-908-9946
48
Step 2:
Follow
prompts to
enter SSN and
the numbers in
their street
address
Step 3:
Select “Option
2” to request a
Tax Return
Transcript
Step 4:
Enter the
appropriate
year
Ordering an IRS
Account Transcript by Telephone
Confirmation will be given
when the process is
completed
49
Ordering an IRS Account Transcript—Method Three:
PAPER FORM
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Ordering an IRS
Account Transcript by Paper Form
Step 1:
Download
Form 4506TEZ at
www.irs.gov/pub
/irs-pdf/
f4506tez.pdf
51
Step 2:
Complete
lines 1-4
using
instructions
from p. 2 of
the form
Step 3:
Line 5 allows
for direct
mailing of the
transcript to a
3rd party
Ordering an IRS
Account Transcript by Paper Form
Step 4:
On line 6,
enter the
appropriate tax
year (e.g.,
2011 for the
12-13 FAFSA)
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Step 5:
The tax filer
must sign & date
the form and
enter a
telephone #.
(Only one
signature is
required to
request a
transcript for a
joint return.)
Step 6:
Mail/fax the
completed
form to the
address/FAX #
on page 2 of
the form
Ordering an IRS
Account Transcript by Paper
• Processing form 4506T-EZ means
validating the information provided on
the form.
• If any information does not match the
IRS records, the IRS will notify the tax
filer that it was not able to provide the
transcript.
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Things to Know about the
IRS Account Transcript
• Tax filers can
expect to receive
a paper IRS Tax
Return Transcript
within 5 -10 days
of successful
validation
54
• IRS Tax Return
Transcripts
requested online
cannot be sent to
a 3rd party if
processed by web
or phone order
SUPPLEMTAL INFORMATION:
IRS TAX TRANSCRIPT
SAMPLE
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Tax Transcript Sample (Part 1)
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Tax Transcript Sample (Part 2)
57
Tax Transcript Sample (Part 3)
58
Tax Transcript Sample (Part 4)
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Tax Transcript Sample (Part 5)
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Tax Transcript Sample (Part 6)
Ta x a n d C r e d i ts ( c o nt. )
61
Tax Transcript Sample (Part 7)
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Tax Transcript Sample (Part 8)
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Tax Transcript Sample (Part 9)
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Tax Transcript Sample (Part 10)
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Tax Transcript Sample (Part 11)
The End!
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