PA Association of Student Financial Aid
Administrators Conference
October 2011
Annmarie Weisman
Training Officer

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What is Verification?
…let’s review
• Process by which certain required data reported on the FAFSA is reviewed for accuracy and completeness
• Verification regulations at 34 CFR
§ 668, Subpart E
• Required Verification policies regulations: 34 CFR § 668.53

Required Verification Policies
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• Must have written P&P on the following:
– Applicant responsibilities/deadlines for submitting documents and consequences of not meeting deadlines
– Method of notifying students of postverification award changes
– Student corrections
– Referring overpayment cases to ED
(More)

Required Verification
Policies (cont.)
• Must also give each applicant selected for verification a written statement explaining:
– Documents required for verification
– Student responsibilities—correction procedures, deadlines for completing any actions required, and consequences of missing the deadlines
– Notification methods—how your will notify a student of resulting award changes, and the time frame for notification
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How Are Applicants Selected?
30% option ends in 11-12
• CPS selection
– Edit checks identify potential errors and inconsistencies
– Random selection
• School selection
– School criteria

What Documents Do I Need?
• For taxable income, base year tax return
• For untaxed income and benefits:
– Official agency documentation
– Verification worksheet
– Signed statement
• Details on acceptable documents are listed in the FSA Handbook and Federal Register

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IRS Data Retrieval Process and Verification
• An institution may consider information retrieved through the IRS data retrieval process as acceptable verification documentation if:
– The Secretary has identified those items as having come from the IRS and
– The items have not been changed
– IRS Request Flag = 02

How Do I Complete the Process?
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• Compare the documents with the original
FAFSA information
– May use a checklist in the file
– May use verification tool on FAA Access
• Determine if:
– Information is correct
– Tolerance option may be used
– Corrections must be made

Verification Tolerance
2011-12 AY
• No recalculation or reprocessing required if
– no change in non-dollar items used to calculate
EFC*
AND
– no dollar amount in excess of $400
2012-13 AY and forward
• No recalculation or reprocessing required if
– no change in non-dollar items used to calculate
EFC*
AND
– no dollar amount in excess of $25
*Remember, some items affect the EFC that are not obvious.
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Verification Status Codes
• Used when reporting Pell and Direct
Loan payments to COD
V = Verified
S = Selected, but not verified
W = Paid without Documentation
Blank = ISIR not selected by CPS or school
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Interim Disbursements* while
Verification Incomplete
• If a school has no reason to suspect that application information is incorrect:
– Pell, FSEOG and Perkins: may make one disbursement for applicant ’ s first payment period
– FWS: employee may work for a maximum of 60 consecutive days from start of enrollment
– Direct Loans: may originate (but not disburse) subsidized loans
* TEACH, PLUS, and Unsubsidized
Direct Loans are not subject to verification/interim disbursements

Update Applicant Information
• For any student, must always update a student ’ s dependency status if it changes during an award year*
• For students selected for verification, must always update household size and number in college at the time of verification*
*Unless the reason is a change in the student ’ s marital status (may make this change in 12/13 & forward)
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“Non-Verification” Reminders
• Regardless of verification status
– Must resolve all “ C codes ”
– Must resolve all conflicting information
• Separate process from verification
• Includes any information of which the school has knowledge
• Done prior to disbursement
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Verification and
Professional Judgment
•
Mistaken belief that you must verify to do a PJ…
If applicant is selected for verification (by
CPS or school):
– MUST verify before performing PJ
• If applicant NOT selected for verification:
– Verification
NOT required
– May perform PJ as usual
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Verification Guidance
(2012-13 process)
• Dear Colleague Letter (DCL) GEN-11-13
– July 13, 2011 Federal Register details FAFSA information to be verified for AY 2012-13
– Summarizes the process for AY 2012-13
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Citations: 34 CFR §§ 668.51 through 668.61

2012-13 Verification Selection
Process and ISIR Flags
• Long-term goal: customized verification based on applicant info.
– Will identify for a selected applicant only the info. that requires verification based upon that applicant ’s data
– Current process requires review of items for all applicants selected for verification
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2012-13 Verification Process
(cont.)
• Long-term goal: customized verification
– Need more historical FAFSA data to develop the customized verification model
• ED is not implementing a fully customized verification process for the 2012-13 AY
• 2012-13 is a variation of the current process
– Analysis will be used to select applicants with the highest probability of error
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2012-13 Verification Process
(cont.)
• A SAR/ISIR will include only one verification flag to indicate selection
– An applicant whose ISIR is so flagged must verify the info. included in the July 13,
2011 Federal Register
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Information to Verify
2012-13
• Information is to be verified for the applicant and, if appropriate, his or her parent(s) or spouse for all applicants selected for verification:
– # of household members
– # in college
– Food Stamps - if reported
– Child Support Paid - if reported
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Information to Verify
2012-13
• Item: # of household members
• Documentation: signed statement
• Exceptions: Verification of this item not required for a dependent applicant when the marital status of the parent(s) of the applicant is:
– separated or unmarried (single, divorced, or widowed) and family size on the FAFSA = 2
– married and family size on the FAFSA = 3
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Information to Verify
2012-13
• Item: # of household members (cont.)
• Documentation : signed statement
• Exceptions : Verification of this item not required for an independent applicant when the marital status is:
– separated or unmarried (single, divorced, or widowed), and the family size on the FAFSA = 1
– married and the family size on the FAFSA = 2
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Information to Verify
2012-13
• Item: # of household members enrolled at least ½ time in eligible post-secondary institutions
• Documentation: signed statement (or written document from post-secondary institution confirming enrollment if requested)
• Exception: Verification not required if # in college on the FAFSA = 1
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Information to Verify
2012-13
• Item: Food Stamps - Supplemental Nutrition
Assistance Program (SNAP) if receipt is indicated on the 2012-13 FAFSA
• Documentation : copy of document from providing agency
• Exceptions : None
• No need to verify amount, just receipt of benefit
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Information to Verify
2012-13
• Item: Child Support Paid if reported on the 2012-13 FAFSA
• Documentation : signed statement (or copy of document from court, person receiving support, or coordinating agency if requested)
• Exceptions : None
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Info. for Tax Filers When
Applicant Selected for Verification
• Adjusted Gross Income (AGI)
• U.S. income tax paid
• Untaxed Income only the following untaxed income if reported on the 2012-13 FAFSA -
– Untaxed IRA distributions
– Untaxed pensions
– Education credits
– IRA deductions
– Tax exempt interest
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Info. for Non-Tax Filers When
Applicant Selected for Verification
• Item: Income earned from work
• Documentation : W-2 form and signed statement that not required to file and the sources of the income
• Exceptions : None
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Using the IRS Data
Retrieval Process is the fastest, easiest, and most secure way to meet verification requirements
*initially FOTW filing
*FOTW corrections
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IRS Data Retrieval
• Applicants who use the IRS Data Retrieval
Process to transfer their tax return info. and do not subsequently change the data will be considered to have verified the applicable
FAFSA info (AGI, taxes paid, and any applicable untaxed income items)
– Code 02 (IRS retrieval used & data unchanged)
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\
IRS Tax Return
Transcript Required
• A tax transcript is required when:
– the IRS Data Retrieval Process was not used
– the IRS Data Retrieval Process was used, but data was subsequently changed
– the institution has reason to believe that the data transferred is inaccurate ( no routine requests )
– a married independent applicant and spouse –orthe parents of a dependent student filed separate tax returns
…but, wait, there’s more…
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IRS Tax Return
Transcript Required
• A tax transcript is also required when:
– an applicant or applicant’s parent had a change in marital status after the end of the tax year (December 31)
– the applicant, or parent, or spouse (as applicable) filed an amended tax return.
• Signature of tax filer not required on IRS Tax
Return Transcripts
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Exceptions to IRS Tax
Transcript Requirement
• In limited circumstances, if an institution determines that obtaining an IRS Tax
Transcript is not possible, the institution may accept a signed copy of the tax return
– Must document the reason for allowing an applicant to do so
– Example: tax return from foreign country or
Puerto Rico
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Where are the line item numbers?
Interpreting the
IRS Account Transcript
• ED will provide further guidance to schools on how to read the IRS Tax
Transcript (locating the info you need on the document)
• Stay tuned to ifap!

Where can you find help?
• FSA Assessments http://ifap.ed.gov/qahome/fsaassessment.html
– Guide to Creating a Policy & Procedures Manual
– Management Enhancement Worksheets
• FSA ’ s Institutional Improvement Specialists
• FSA Application and Verification Guide , Ch. 4

http://ifap.ed.gov/qahome/fsaassessment.html

Other Resources
• Preamble to the Program Integrity Notice of
Proposed Rulemaking (NPRM) - 75 FR 34825 –34834
(June 18, 2010)
• Preamble and Subpart E of the Program Integrity
Final Regulations -75 FR 66902 –66913 and 66954–
66958 (October 29, 2010)
• Dear Colleague Letter GEN –11–03
• 2012 –2013 ISIR Guide
• 2012 –2013 SAR Comment Codes and Text
• 2012 –2013 COD Technical Reference
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School Participation Team (SPT)
Contact Information
The Institutional
Improvement
Specialists
(IISs) are part of the SPT.

Contact Information
• For follow-up questions about this session, contact me at:
– Annmarie Weisman, Training Officer
– annmarie.weisman@ed.gov
– 215-656-6456
• To provide feedback to my supervisor:
– Tom Threlkeld, Supervisor
– thomas.threlkeld@ed.gov
– 617-289-0144

Your Region III Training Team
• Greg Martin, Training Officer
– gregory.martin@ed.gov
– 215-656-6452
• Craig Rorie, Training Officer
– craig.rorie@ed.gov
– 215-656-5916
• Annmarie Weisman, Training Officer
– annmarie.weisman@ed.gov
– 215-656-6456

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Ordering an IRS
Account Transcript —Three Methods
Online
• IRS website
• www.irs.gov
Phone
• Toll free IRS number
• 1-800-908-9946
Paper
• Obtain form online and mail to the IRS
• http://www.irs.gov/pub/irs-pdf/f4506tez.pdf

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Ordering an IRS Account Transcript —Method One:

Heightened Cash Monitoring 2
(HCM2)/Reimbursement
Heightened Cash Monitoring 1
(HCM1)
Advanced Payment
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Ordering an IRS
Account Transcript online (Steps 1-3)
Step 1:
Click Order a
Tax Return or
Account
Transcript
Step 2 :
Click Order a
Transcript
Step 3:
Enter the tax filer’s information:
• SSN
• DOB
• Address
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Ordering an IRS
Account Transcript online (Steps 4-6)
Step 4:
Click Continue
Step 5: Select
Return
Transcript under the Type of
Transcript field
Step 6: Select the appropriate year in the Tax Year filed (e.g., 2011)
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Ordering an IRS Account Transcript —Method Two:

Ordering an IRS
Account Transcript by Telephone
Step 1:
Call the IRS at
800-908-9946
Step 2:
Follow prompts to enter SSN and the numbers in their street address
Step 3:
Select “ Option
2” to request a
Tax Return
Transcript
Step 4:
Enter the appropriate year
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Ordering an IRS
Account Transcript by Telephone

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Ordering an IRS Account Transcript —Method Three:

Step 1:
Download
Form 4506T-
EZ at www.irs.gov/pub
/irs-pdf/ f4506tez.pdf
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Ordering an IRS
Account Transcript by Paper Form
Step 2:
Complete lines 1-4 using instructions from p. 2 of the form
Step 3:
Line 5 allows for direct mailing of the transcript to a
3 rd party

Ordering an IRS
Account Transcript by Paper Form
Step 4:
On line 6, enter the appropriate tax year (e.g.,
2011 for the
12-13 FAFSA)
Step 5:
The tax filer must sign & date the form and enter a telephone #.
(Only one signature is required to request a transcript for a joint return.)
Step 6:
Mail/fax the completed form to the address/FAX # on page 2 of the form
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Ordering an IRS
Account Transcript by Paper
• Processing form 4506T-EZ means validating the information provided on the form.
• If any information does not match the
IRS records, the IRS will notify the tax filer that it was not able to provide the transcript.
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Things to Know about the
IRS Account Transcript
• Tax filers can expect to receive a paper IRS Tax
Return Transcript within 5 -10 days of successful validation
• IRS Tax Return
Transcripts requested online cannot be sent to a 3 rd party if processed by web or phone order
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SUPPLEMTAL INFORMATION:

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Tax Transcript Sample (Part 1)

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Tax Transcript Sample (Part 2)

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Tax Transcript Sample (Part 3)

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Tax Transcript Sample (Part 4)

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Tax Transcript Sample (Part 5)

Tax Transcript Sample (Part 6)
T a x a n d C r e d i t s ( c o n t . )
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Tax Transcript Sample (Part 7)

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Tax Transcript Sample (Part 8)

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Tax Transcript Sample (Part 9)

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Tax Transcript Sample (Part 10)

Tax Transcript Sample (Part 11)

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