Minimizing or Avoiding IRS Penalties on 1098-T Filing
Learn how to respond to IRS penalties on 1098-T filings, understand 972CG notices, reasons for reporting errors, steps for appealing penalties, and what to do after submitting an appeal. Take action within the 45-day window to avoid fines and potential interest charges.
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Minimizing or Avoiding IRS Penalties on 1098-T Filing TACCBO 2021
TACCBO 2021 You submitted your 1098-T filing to the IRS and then a couple of years later along comes a 972CG penalty notice! NOW WHAT??
TACCBO 2021 What is a 972CG Notice? Notice of Proposed Penalty from the IRS IRC 6721: Failure to File Correct Information Returns Missing or incorrect SSN/TIN s or names Late filing Paper returns submitted instead of electronic
TACCBO 2021 Why reporting errors on 1098-T happen: Students input incorrect SSN on application for admission. Students don t enter an SSN on the application. Students don t always list their full legal name on the application. Students have name changes due to marriage, divorce, or other reasons. Data entry errors from school admissions staff.
TACCBO 2021 Responding to 972CG notice Must be answered within 45 calendar days Can submit written request for more time, OR Pay the fine, OR Request a waiver of the penalty
TACCBO 2021 Appealing the Penalty (Pt. 1) Must be in writing Must state provision under which waiver is requested Must show reasonable cause --show all facts for basis of appeal --show filer acted in responsible manner --show TIN solicitation regulations were followed
TACCBO 2021 Appealing the Penalty (Pt. 2) Must be signed by person required to file the return Contains declaration that it is made under penalties of perjury. Copies of back-up not required unless requested later by the IRS* *They will always ask, so it doesn t hurt to send it anyway!
TACCBO 2021 After the appeal is submitted: If you established reasonable cause, appeal is granted If you did not or if you only partially established reasonable cause, a penalty will be assessed. If you do not respond at all to the 972CG notice, you must pay full penalty and potentially incur interest
TACCBO 2021 What is reasonable cause ? Filers must show that they acted in a responsible manner both before and after the failure occurred AND There were significant mitigating factors OR The failure was due to events beyond the filer s control Download & Follow the IRS publication Reasonable Cause Regulations & Requirements for Missing and Name/TINs for more information. Incorrect
TACCBO 2021 SSN/TIN Solicitations School must request SSN at time relationship is established (application for admission) If student does not furnish SSN, schools must request it Must make two SSN requests each calendar Requests for SSN can be electronically by mail, telephone, or
TACCBO 2021 Request SSN by Mail Letter stating payee must provide accurate SSN and failure to do so could result in $50 penalty under IRC 6723 Form W-9, Request for Taxpayer Identification Number and Certification [Can use substitute form] A return envelope, which may or may not include postage prepaid
TACCBO 2021 Request SSN by Telephone Call each payee with missing SSN & request the SSN Inform payee of the $50 penalty under IRC 6723 Maintain records showing request was made Provide records to IRS, if requested
TACCBO 2021 Electronic SSN Requests Information sent must be same as paper Be certain person with access to the electronic request is the correct person Require an electronic signature Be able to supply a hard copy to IRS, if requested Electronic signature must provide for penalty of perjury statement Must have a paper option for students if requested
TACCBO 2021 Incorrect Names/SSN s Procedures incorrect SSN s or names are same as those for missing SSN s Begin solicitations once school is notified of the incorrect SSN or name for requesting updates or verifications of
TACCBO 2021 One last (important) step: There is also a box that can be checked for each missing SSN (or any that the IRS has told you are incorrect) that certifies that all reasonable followed and that the school has requested the correct information. 2021 Instructions for Forms 1098-E and 1098-T (irs.gov) cause requirements are
TACCBO 2021 Thank you for your time! Any questions or follow up? Sherry Pollett Director of Financial Services Central Texas College District Sherry.pollett@ctcd.edu
