070920AltAcceptDocCompleteIRSVNFW2ProfJudgmentCOVID

Author
Office of Postsecondary Education
Subject
Reminder of Alternative Acceptable Documentation to Complete for IRS Verification of Non-Filing (VNF) and Form W-2; Increase in Professional Judgments due to COVID-19

The Department understands that due to the novel coronavirus disease (COVID-19) pandemic, institutions and their students face challenges in obtaining certain documentation needed to verify their Free Application for Federal Student Aid/Institutional Student Information Record (FAFSA/ISIR) information. Particularly, foster youths and unaccompanied homeless youth are having an extremely difficult time obtaining Verification of Non-Filing (VNF) and IRS Form W-2 (or an equivalent document from the appropriate tax authority). Therefore, we remind institutions of other documentation acceptable to complete verification for nontax filers and extension filers. In addition, allowing a signed attestation for a VNF or an IRS Form W-2 will not, alone, be criteria used to select an institution for a program compliance review.

Verification of Non-Filing

As stated in the January 9, 2019 Electronic Announcement, individuals are still required to obtain verification of non-filing (VNF) from the IRS or other tax authorities. However, we are aware that the IRS has stopped processing transcript requests by mail until further notice. Although IRS Tax Transcripts are still available online, many filers may have difficulty accessing this option. Therefore, if the individual is unable to obtain VNF from the IRS or other tax authorities and, based upon the institution’s determination, it has no reason to question the student’s or family’s good-faith effort to obtain the required documentation, the institution may accept the following information.

Nontax filers - For independent students and parents of dependent students who did not file and are not required to file an income tax return for the applicable tax year, an institution may accept—

  • A signed statement certifying that the individual—
    • Attempted to obtain the VNF from the IRS or other tax authorities and was unable to obtain the required documentation; and
    • Has not filed and is not required to file an income tax return for the applicable tax year, and a listing of the sources of any income earned by the individual from work and the amount of income from each source for the applicable tax year; and
  • A copy of IRS Form W–2, or an equivalent document, for each source of employment income received by the individual for the applicable tax year. During this period of national emergency, the Department is permitting institutions to accept a copy of a paystub, an employment offer letter, evidence of direct deposit from an employer, or other similar information for verification purposes. In the case of foster care youth, given the unlikelihood that such students would have earned enough to require them to file taxes, we will permit the institution to accept a signed statement from the foster care youth that he or she earned less than the amount that triggers the requirement for taxpayers to file tax returns.

Note: A dependent student who is a nontax filer is excluded from the verification requirement to provide confirmation of the dependent student’s non-filing status from the IRS or other relevant tax authority.

Extension Filers - For individuals who are required to file an IRS income tax return but have not filed because they have been granted a filing extension by the IRS beyond the automatic six-month extension for the tax year, an institution may accept—

  • A signed statement certifying that the individual—
    • Attempted to obtain the VNF from the IRS or other tax authorities and was unable to obtain the required documentation; and
    • Has not filed an income tax return and list the sources of any income, and the amount of income from each source for the applicable tax year. If self-employed, the signed statement must also include the amount of AGI and U.S. income tax paid for the applicable tax year;
  • A copy of the IRS’s approval of an extension beyond the automatic six-month extension for the appropriate tax year; and
  • A copy of IRS Form W–2 for each source of employment income received or an equivalent document for the applicable tax year.

Note: Since a Social Security Number, an Individual Taxpayer Identification Number, or an Employer Identification Number is required to obtain a verification of non-filing from the IRS, nontax filers without one of these identifiers must provide the documentation required under Q&A DOC-Q29/A29.

The above guidance was added to the May 29, 2019 Federal Register Notice of Information to be Verified for the 2020-2021 Award Year. Please refer to footnote 4 in the Notice.

Obtaining a Duplicate Internal Revenue Service (IRS) Form W-2

An individual who is required to submit an IRS Form W–2, or a tax authority equivalent document, but did not maintain a copy should request a duplicate from the employer who issued the original or from the government agency that issued the equivalent document. If the individual is unable to obtain a duplicate W–2 or an equivalent document in a timely manner, the institution may permit that individual to provide a signed statement, in accordance with 34 CFR 668.57(a)(6), that includes—

(a) The amount of income earned from work;

(b) The source of that income; and

(c) The reason why the IRS Form W–2, or an equivalent document, is not available in a timely manner.

Additional Documentation Requirements – Some individuals may be required to submit additional documentation to verify income, tax, or other information provided on the FAFSA. Information regarding acceptable documentation as well as all other verification requirements can be found in the Federal Register Notice of Information to be Verified for the applicable award year.

Professional Judgment

Section 479(a) of the Higher Education Act states that:

IN GENERAL—Nothing in this part shall be interpreted as limiting the authority of the financial aid administrator, on the basis of adequate documentation, to make adjustments on a case-by-case basis to the cost of attendance or the values of the data items required to calculate the expected student or parent contribution (or both) to allow for treatment of an individual eligible applicant with special circumstances. Special circumstances may include recent unemployment of a family member or an independent student.

The Department understands that high unemployment nationwide resulting from the COVID-19 pandemic will increase the number of professional judgment decisions performed. The Department released guidance on April 3, 2020 encouraging financial aid administrators (FAA) to use professional judgment to reflect more accurately the financial need of students and families affected by the COVID-19 pandemic. We know that many FAAs have been reluctant to use professional judgment because the Department has used the percentage of students for whom a professional judgment determination has been made as part of its risk-based model to select institutions for program reviews. For the 2019-20 and 2020-21 award years, the Department will make appropriate adjustments to its risk-based model and will not negatively view increased use of professional judgment or use it as a selection criterion for a program compliance review.

For more information on professional judgment please see the Application and Verification Guide in the 2020-21 FSA Handbook (page 125), as corrected on June 12, 2020.