Penalty Relief for Form 1098-T

IRS Announcement 2016-17 provides penalty relief with respect to the 2016 Form 1098-T, which eligible educational institutions are required to file by February 28, 2017 (or March 31, 2017 if filed electronically). Subsequently, the IRS issued Announcement 2016-42, which extended penalty relief to tax year 2017 with respect to the form 1098-T.

The relief only applies to institutions affected by an amendment to Section 212 of the Protecting Americans from Tax Hikes (PATH) Act of 2015. With the amendment, eligible educational institutions no longer have the option to report aggregate qualified tuition and related expenses billed for the calendar year. Previously, they could report either amounts received or amounts billed during a calendar year.

The amendment—to section 6050S(b)(2) made by Section 212 of the PATH Act—is effective for qualified tuition and related expenses paid after December 31, 2015, for education provided during academic periods beginning after that date. Due to the difficulty of implementing the change, the IRS won’t impose a penalty if eligible education institutions continue to report the amount billed versus the amount received for calendar years 2016 and 2017.

Contact your Moss Adams professional to understand how this might affect you, or visit the IRS Web site for more detailed information.