VERIFICATION: 111, 212, 313, Why Subpart E Verification and Updating of Student Aid Application Information 34 CFR

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1 VERIFICATION: 111, 212, 313, RMASFAA Conference James Broscheit, Montana State University Bailey Jorgensen, Clarkson College 101 Why Subpart E Verification and Updating of Student Aid Application Information 34 CFR Verification is intended to improve the accuracy of the information submitted on the FAFSA. It is not intended to function like a forensic audit. But the college financial aid office may not process requests for professional judgment or disburse federal student aid until the verification process is complete. Financial aid administrators have the right to ask for any documentation they feel is necessary to complete verification. If the family refuses to supply this documentation, the college is prohibited from disbursing federal student aid to the student. 201 (a) General requirements. (1) Except as provided in paragraph (b) of this section, an institution must require an applicant whose FAFSA information is selected for verification by the Secretary, to verify the information specified by the Secretary pursuant to (2) If an institution has reason to believe that an applicant's FAFSA information is inaccurate, it must verify the accuracy of that information. (3) An institution may require an applicant to verify any FAFSA information that it specifies. 1

2 AwardYear: ChapterNumber: 4 ChapterTitle: Discretionary Verification Section: Verifying Total Income PageNumber: 201 If the applicant's reported AGI (or income earned from work) is so low that you doubt the family could have lived on that, you may wish to verify total income. Verification of total income is not required, though required verification does include some of the components of total income. Total income is the sum of AGI (or income earned from work), Social Security Benefits, AFDC, and other untaxed income. (See Worksheet #2 in the FAFSA Instructions for a detailed list of other income that must be reported.) A Tip for Verifying Total Income Often, when a student is asked to explain how bills are paid, unreported sources of income are discovered. Ask how much monthly housing and utility bills are, and from what income source they are paid. Also ask about food costs, medical bills, and car payments QA Pilot 1986 Needs Analysis put into law Quality Assurance Program available to everyone. Quality Assurance Program approach the verification of information reported by students and parents on the FAFSA in a more targeted, institutionally-developed manner. In lieu of following the federally prescribed verification of FAFSA information, Quality Assurance Program schools develop their own institutional process of verifying the accuracy of FAFSA data. The basic premise of the Quality Assurance Program is to allow schools to devise their own school verification procedures to effectively target applicants who, when verified, were likely to experience a change in eligibility for Title IV financial aid. 2

3 Department of Education authorized to work with the IRS. 1998/99 Worksheet language: For non-tax filers and all tax filers (includes the 1997 IRS Form 1040, 1040A, 1040EZ, TeleFile Tax Record, a tax return from Puerto Rico or a foreign income tax return). If your parent(s) did not keep a copy of the tax return, request an RTFTP printout or Letter 1722 from the Internal Revenue Service or a copy from the tax preparer 301 Next Decade + or - Five verification items for 30% of their FAFSAs, with some colleges voluntary verifying 100% of their student's FAFSAs. household size, number enrolled in college, adjusted gross income (AGI), U.S. income tax paid, and certain untaxed income and benefits household size, number enrolled in college, adjusted gross income (AGI), U.S. income tax paid, and certain untaxed income and benefits You can usually verify AGI and U.S. income tax paid by getting a copy of the signed U.S. income tax return. You must check the tax returns for anyone whose financial data were reported on the FAFSA IRS Data Retrieval Tool first available (pilot) (nearly 10 years after negotiations begin) Same 5 items The Department has made a new feature fully operational (previously it was piloted): the IRS Data Retrieval process. Beginning with the summer of , students and parents who are using FAFSA on the Web and who have already submitted their federal tax return will be able to electronically retrieve their tax data from the IRS database. 3

4 Adjusted gross income (AGI) and U.S. income tax paid Students and parents who used the IRS Data Retrieval process to import their data directly from the IRS either when the application was first filled out or later as a corrective and who didn t change the data will have an associated code on the ISIR. That is sufficient to verify AGI and U.S. income tax paid. Tax Return still ok Targeted Verification (risk model) Same 5 traditional items plus. SNAP, Child Support, Income from Work 30% intuitional verification cap removed IRS DRT added as acceptable verification documentation (flag 02) Applicants who opted out of DRT subject to verification selection If students cannot or will not use IRS Data Retrieval they must document AGI, taxes paid, and untaxed income by providing an IRS tax return transcript Exception to allow signed copy of tax return for limited time Introduction of verification groups (V1-V5) High school completion and identity/statement of education purpose added The Department s long-term goal is for a customized approach to verification. A menu of potential verification items for each award year will be published in the Federal Register, and the items to verify for a given application will be selected from that menu and indicated on the student s output documents. Output documents will continue to include only one verification flag to show students who were selected, and they will need to verify all the FAFSA items shown in the margin that apply to them. Tax Return still allowed. 4

5 Verification of non-filing status added (only if school questions) V2 (SNAP) eliminated; SNAP/food stamps must be verified for V1, V4, V5, & V6 Schools required to report high school completion/identity statement Comment Codes on Marital Status V6: Household Resources Group. Tracking flag V6. Students must verify the items in the Standard Verification Group as well as certain other untaxed income payments to tax-deferred pension and retirement savings plans child support received housing, food, and other living allowances paid to members of the military, clergy, and others veterans noneducation benefits other untaxed income money received or paid on the applicant s behalf resources or benefits not appearing on the FAFSA, such as in-kind support from a relative or a government agency IRS Get Transcript online unavailable May 2015-June 2016 Tax Returns OR no Tax Returns? Signed copy of 2014 tax return acceptable under certain circumstances Institutions should use reasonable judgment when evaluating the validity of the income information provided by students and parents who are placed in Verification Tracking Group V6, and are therefore asked to provide information on how they financially supported themselves or their families. All applicants placed in Verification Tracking Group V6 must provide a copy of their IRS Form W-2 If an institution questions: Verification of Nonfiling Letter With your support, we are confident that we will continue to reduce the burden on applicants, their families, and institutions while maintaining the integrity of the Title IV Federal student aid programs Can we get the guidance right: requirements changed during the year. Is that good or bad? Verification of non-filing required for all, but removed starting April 2017 V3 eliminated Applicants may be moved from V1 or V4 after verification is completed to V5 or V6 DRT not available for 16/17 or 17/18 Schools can accept signed copy of 2015 tax return A Tax Return DataBase View (TRDBV) transcript obtained from the IRS 5

6 the Department to select for verification the FAFSA applicants with the highest statistical probability of error and the impact of such error on award amounts Start of prior prior year (PPY), 2 nd year of 2015 tax data Quality Assurance Program ends V6 eliminated Verification of non-filing required again (but adjusted) 399 codes: Nesting under Conflicting Information and not Verification IRS REQUEST FLAGS IRS Request Flag Blank to 07 - REALLY 1819: IRS Request Flag 06 Applicant or parent used IRS DRT, but made subsequent change that made them ineligible New 1819: IRS Request Flag 07 Removed question related to filing amended return Applicant or parent used IRS DRT, but IRS determines tax filer has amended return IRS DATA DISPLAY FLAGS For each item that was transferred Blank = IRS data not transferred from the IRS (when FAFSA transaction submitted via paper or by a financial aid administrator) 00 = IRS data not transferred from the IRS (when FAFSA transaction not submitted via paper or by a financial aid administrator) 01 = IRS data transferred from the IRS Field not changed by the user 02 = IRS data transferred from the IRS Field changed by the user prior to submission of the application (can only occur for IRA and Pension fields that were changed as a result of the user entering a rollover amount) 03 = IRS data transferred from the IRS Field corrected by the user on this transaction 04 = IRS data transferred from the IRS Field corrected by the user on a previous transaction 05 = was presented with the option to use the IRS Data Retrieval Tool in FAFSA on the Web, but did not elect to use it 6

7 IRS REQUEST FLAGS IRS Display Flags Blank, A N: REALLY Are there really this many options for the student to be able to use the DRTif it is the preferred method Data transferred from IRS is masked for student/parent IRS Flags.. Dependent Students Who Are Nontax Filers Non-filing requirement removed for dependent students Verification Requirements for Individuals Who Are Eligible for an Auto Zero Expected Family Contribution (EFC) Warning Edits to FAFSA Applicants DHS Match 400/ codes introduced COMMENT CODES 400 & AGI retrieved from IRS is 0, but total income earned from work is greater than 0 Total of Additional Financial Information fields is greater than AGI transferred from IRS Any item from Untaxed Income is equal to or exceeds AGI transferred from IRS 7

8 RESOLUTION OF COMMENT CODE 400 & Code 400/? Yes Conflict exists? Yes Collect & review documentation. No No Document; no further resolution required. No Correction required? Yes Award & disburse, if otherwise eligible. Collect & review documentation. 400/ TRICK FAA Access to CPS Online Student Inquiry Make Corrections VERIFICATION SELECTION GROUPS 2019/20 V1 Standard Verification Group V2 Reserved V3 Reserved V4 Custom Verification Group V5 Aggregate Verification Group V6 - Reserved 8

9 V1 ITEMS REQUIRED TO BE VERIFIED Tax Filers AGI US Income Tax Paid Untaxed Portions of IRA Distribution Untaxed Portions of Pensions IRA Deductions & Payments Tax Exempt Interest Income Education Tax Credits Nontax Filers Income Earned from Work Tax Filers & Nontax Filers Number in Household Number in College ACCEPTABLE DOCUMENTATION Tax Filers IRS DRT Tax Return Transcripts Alternate documentation where allowed (e.g. amended returns, foreign returns, etc.) Nontax Filers Signed Statement Copy of IRS Form W-2 Verification of Non-Filing (only for parents and independent students) Number in HH & College Signed statement Not required for certain logical assumptions V4 ITEMS REQUIRED TO BE VERIFIED High School Completion Status Identity/Statement of Educational Purpose 9

10 HIGH SCHOOL COMPLETION STATUS Documentation High school diploma Final official high school transcript Secondary school leaving certificate Recognized equivalent GED 2-year program acceptable for credit toward bachelor s degree Excelled academically in HS Test transcripts of State-authorized examinations (DCL: GEN-14-06) Homeschooled Secondary school completion credential Transcript signed by parent or guardian IDENTITY/STATEMENT OF EDUCATIONAL PURPOSE Appear in person Valid NON-EXPIRED government issued photo ID Signed statement of education purpose (must use wording provided by ED) Maintain annotated copy of identification Date received Name of institutionally authorized individual Unable to appear in person Copy of valid NON-EXPIRED government issued photo ID Original, notarized statement signed by applicant V4/V5 TRACKING RESULTS Report through FAA Access to CPS Online Report within 60 days of requesting information 10

11 V5 ITEMS REQUIRED TO BE VERIFIED All items indicated for V1 AND High School Completion Status Identity/Statement of Educational Purpose CHALLENGES Discuss what are you experiencing? 11