On July 17, ED published Dear Colleague Letter (DCL) GEN-12-11 which expands upon the recently published Federal Register that announces the items that schools and applicants may be required to verify for the 2013-2014 award year. The DCL also reminds schools about the transition to customized verification, the IRS Data Retrieval process, verification tracking flags, and when an IRS Return Tax Transcript may be necessary.
New items for verification
As previously announced in Shoptalk, while certain items that may be verified for an individual who submits a Free Application for Federal Student Aid (FAFSA) for the 2013-2014 award year remain unchanged from the current award year, there are two new items outlined in the Federal Register notice:
- High school completion status of the applicant
- Applicant's identity and statement of educational purpose
The DCL reminds schools to review the notice as it not only contains the acceptable documentation requirements for the new items, but also notes that the documentation requirements for some of the other items have changed, such as child support paid and SNAP benefits.
Customized verification and verification tracking flags on the ISIR ED's long-term goal for verification is to transition to a customized selection approach based on the FAFSA data provided by each applicant. The DCL reminds schools that this transition is ongoing and will continue into the 2013-2014 award year.
As customary, when an applicant is selected for verification, the Central Processing System (CPS) will place a verification flag on the applicant's Institutional Student Information Record (ISIR). New for the 2013-2014 award year, ED will use verification tracking flags to place an applicant into one of five verification tracking groups. Each tracking group has a specific list of FAFSA items that will be verified. Schools will need to review the DCL to better understand the groups in more detail.
ED advises schools that it will provide more information about the technical specifications for the ISIR record layout and the verification tracking flag values in subsequent electronic announcements and technical releases.
IRS Data Retrieval Tool
Whether applicants are initially completing the FAFSA or making corrections to it through FAFSA on the Web (FOTW), ED reemphasizes the importance of informing applicants about utilizing the IRS Data Retrieval Tool.
Schools should take care to promote the tool in their communications with current and prospective students. The value proposition of the tool is that it allows applicants to meet certain verification requirements related to IRS tax data provided the data has not been changed (adjusted gross income, taxes paid, and the applicable untaxed income items and education credits, if any).
As a reminder, if changes are made to the transferred tax information, or if the school has reason to believe the data transferred is inaccurate, the applicant must provide other acceptable documentation (i.e. IRS Tax Return Transcript).
IRS Tax Return Transcripts
While the IRS Data Retrieval Tool will be available to many applicants, in some cases, it will be necessary for an applicant (including his or her parents or spouse, as applicable) to submit an IRS Tax Return Transcript for the 2012 tax year to the school. The DCL provides a summary of the cases outlining when such a transcript is required. They include:
- The applicant (or parent) did not use the IRS Data Retrieval Tool — either when initially filing the FAFSA, or when making corrections using FOTW.
- Tax information obtained using the IRS Data Retrieval process was changed before or after submitting the initial FAFSA or making corrections using FOTW.
- Married independent applicant and spouse filed separate tax returns.
- Married parents of a dependent student filed separate tax returns.
- The applicant or the applicant's parent had a change in marital status after the end of the 2012 IRS tax year on December 31, 2012.
- The applicant, or parent or spouse, as applicable, filed an amended tax return. In this case, the IRS Tax Return Transcript in addition to an IRS Tax Account Transcript will be needed to complete verification. As an alternative to these two transcripts, the school may utilize an IRS Record of Account for the applicable individual.
Finally, it is important to note that the IRS Tax Return Transcript does not need to be signed by the tax filer. As schools receive questions on obtaining transcripts from the IRS, it will be helpful to refer to the attachment included with the DCL as it describes processes available for taxpayers to obtain a transcript free of charge.
For more information
Schools should periodically check the Information for Financial Aid Professionals Website for new guidance, as ED will be providing additional training in the future and publishing information about the verification process in the 2013-14 Application and Verification Guide, ISIR Guide, and the COD Technical Reference.