Fundamentals of Title IV Administration

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Verification

PA Association of Student Financial Aid Administrators Conference October 2011

Annmarie Weisman Training Officer

2 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 3

• 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 post verification 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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5 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

7 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) 12

“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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Information to Verify 2012-13

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

21

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

22

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

25

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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Less Burdensome Verification

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 –or the 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

36

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 – [email protected]

– 215-656-6456 • To provide feedback to my supervisor: – Tom Threlkeld, Supervisor – [email protected]

– 617-289-0144

Your Region III Training Team

• Greg Martin, Training Officer – [email protected]

– 215-656-6452 • Craig Rorie, Training Officer – [email protected]

– 215-656-5916 • Annmarie Weisman, Training Officer – [email protected]

– 215-656-6456

QUESTIONS?

41

Supplemental Information

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:

IRS WEBSITE

Ordering an IRS Account Transcript

Heightened Cash Monitoring 2 (HCM2)/Reimbursement Heightened Cash Monitoring 1 (HCM1) Advanced Payment

44

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:

TELEPHONE

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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49 Ordering an IRS Account Transcript by Telephone

Confirmation will be given when the process is completed

50

Ordering an IRS Account Transcript —Method Three:

PAPER FORM

Step 1: Download Form 4506T EZ at www.irs.gov/pub /irs-pdf/ f4506tez.pdf

51 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

52

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:

IRS TAX TRANSCRIPT SAMPLE

56 Tax Transcript Sample (Part 1)

57 Tax Transcript Sample (Part 2)

58 Tax Transcript Sample (Part 3)

59 Tax Transcript Sample (Part 4)

60 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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62 Tax Transcript Sample (Part 7)

63 Tax Transcript Sample (Part 8)

64 Tax Transcript Sample (Part 9)

65 Tax Transcript Sample (Part 10)

Tax Transcript Sample (Part 11)

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The End!

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