IRS Extends Transitional Relief for PATH Act’s Changes to Form 1098-T Reporting for Colleges and Universities

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November 17, 2016

In Announcement 2016-42, the IRS recently provided transitional penalty relief to certain colleges and universities with respect to new Form 1098-T reporting requirements under the Protecting Americans from Tax Hikes (PATH) Act of 2015.  Specifically, the IRS will not impose penalties under Code section 6721 or 6722 on an eligible educational institution with respect to Forms 1098-T required to be filed and furnished for the 2017 calendar year, if the institution reports the total amount billed for qualified tuition and related expenses instead of the total payments received, as required by section 212 of the PATH Act.  This transitional relief for 2017 reporting effectively extends the same transitional relief for 2016 reporting in Announcement 2016-17, released this spring (see prior coverage).  In both instances, the IRS provided transitional relief because numerous eligible educational institutions indicated that, despite their diligent efforts, they have not fully implemented accounting systems, software, and business practices necessary to satisfy the new reporting requirement.

Earlier this year, the IRS issued proposed regulations to reflect other changes made to the Form 1098-T reporting requirements by Congress as part of the Trade Preferences Extension Act of 2015 (TPEA) and the PATH Act (see prior coverage).