This blog was last updated on June 27, 2021

IRS Releases Announcement 2016-03: Limited Penalty Relief for Filers of Form 1098-T

As tax season is upon us, the IRS has released Announcement 2016-03 providing notice that the IRS will not impose penalties under section 6721 or 6722 on eligible educational institutions required to file Forms 1098-T, Tuition Statement, for the 2015 calendar year solely because they fail to include a student’s correct taxpayer identification number (TIN) on Form 1098-T. The Trade Preferences Extension Act of 2015 made a recent amendment providing that no penalty will be imposed under section 6721 or 6722 against an eligible educational institution solely by reason of failing to include an individual’s TIN on a Form 1098-T or related statement if the institution contemporaneously certifies under penalties of perjury in the form and manner prescribed by the Secretary that it has complied with the standards promulgated by the Secretary for obtaining such individual’s TIN. This provision applies to returns required to be made and statements required to be furnished after December 31, 2015. Since the IRS was unable to make the necessary programming and form changes to implement this amendment for the 2015 calendar year, the IRS has decided to not impose penalties under section 6721 or 6722 for eligible educational institutions that timely file or furnish 2015 Forms 1098-T or statements with missing or incorrect TINs during the 2016 reporting season. However, this penalty relief is only limited to 2015 Forms 1098-T required to be filed by eligible educational institutions by February 29, 2016, or March 31, 2016 (if filed electronically). This notice does not provide penalty relief for any other failure that would cause a filer to be subject to penalties under 6721, 6722, or any other penalty under any provision of the Code. A complete copy of the text of Announcement 2016-03 can be found here. At Sovos, our goal is to keep you informed as the IRS makes relevant changes that affect your business. Sign up for our blog to receive these types of important updates that may affect your tax information reporting obligations.