By David Futrell, Training & Regulatory Assistance Staff and Mandy Sponholtz, Policy & Federal Relations Staff

 In response to questions from NASFAA, its members, and the financial aid community at large, on August 13, 2015, the U.S. Department of Education (ED) updated its Program Integrity Q&A website guidance on verification of individuals who filed an amended tax return. This guidance is effective for verifications completed on or after August 13, 2015, for the 2015–16 award year, and carries forward to the 2016–17 award year. It supersedes guidance issued earlier this summer, including Dear Colleague Letter GEN-15-11.

When the school is aware that an individual has filed an amended tax return, the school needs to collect the following documents to complete verification for that individual:

• An IRS Tax Return Transcript that includes information from the original tax return OR any other IRS tax transcript that includes all income and tax information from the original tax return required for verification (neither of which has to be signed); and
• A signed copy of the IRS Form 1040X that was filed with the IRS.

You will note that a signed copy of the original tax return that was filed with the IRS is no longer acceptable for completing verification. ED further notes that applicants who use the IRS Data Retrieval Tool (DRT), and then amend their tax returns, still must provide verification documentation, as outlined above. Schools cannot rely on DRT information in lieu of tax transcripts.

You may find this updated guidance in DOC-Q2 and DOC-A2 on the ED Program Integrity Q&A website. Per DOC-Q10/DOC-A10, alternative tax transcripts can include a Record of Account Transcript, a Return Transcript for Taxpayer (RTFTP), or any other IRS tax transcript that includes all of the income and tax information required for verification. Remember that, while an IRS Tax Account Transcript and an Information Returns Processing Transcript Request—Wages (IRPTR-W), may contain certain verification data elements, they do not contain all of the information needed to complete verification.

Schools that completed verification prior to August 13, 2015, do not need to reverify those files based on this updated guidance. For previously completed verifications, the school should have followed the ED guidance available at the time. Schools should follow the above guidance to verify individuals who have not yet completed verification as of August 13, 2015.

See GEN-15-11 for additional information on the 2016–17 verification requirements. To learn more about all the verification requirements and acceptable documentation for 2016–17, register for NASFAA’s Verification webinar.

Publication Date: 8/17/2015

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