Laws & Guidance HIGHER EDUCATION
Program Integrity Questions and Answers - Verification

Program Integrity Q&A

Archived Guidance
beginning with the 2012-2013 award year

Questions on this topic are divided into the following categories:

UNLESS OTHERWISE NOTED, THE GUIDANCE BELOW APPLIES TO ALL AWARD YEARS BEGINNING WITH 2012-2013.

Introductory Verification Questions (IVQ)

IVQ-Q1. What is the effective date of the new regulations on the verification and updating of student aid application information for applicants who receive subsidized student financial assistance?

IVQ-A1. Archived

IVQ-Q2. What are the subsidized and unsubsidized student financial assistance programs?

IVQ-A2. Archived

IVQ-Q3. What is the impact on the Department's verification selection when FAFSA corrections are made by a financial aid administrator (FAA) or by a student?

IVQ-A3. If the Department did not select the student for verification on an earlier transaction, subsequent corrections could result in the student being selected for verification since the corrected record will be reassessed in the verification selection process. However, if the correction is the result of professional judgment by the FAA (assuming the FAA properly flagged the correction as being made under professional judgment), the record will not go through verification selection again.

If the Department selected the student for verification on the earlier transaction, every subsequent transaction for that award year will indicate that the student is selected for verification, even a transaction that was the result of professional judgment. Prior to making professional judgment adjustments, an institution is required to complete verification when the student's FAFSA information has been selected for verification by the Department or the institution. (Section 668.56) [Guidance issued 03/13/2013; revised 7/7/2015]

IVQ-Q4. Will the Verification Tracking Group to which the student had been initially assigned ever change as a result of subsequent corrections?

IVQ-A4. Yes. Beginning with 2016-2017 FAFSA processing, a student may be moved from a previously assigned Verification Tracking Group of V1, V4, or V6 to Verification Tracking Group V5 based on corrections made to the student's CPS record or on other information available to the Department. In these instances the student is only required to verify the FAFSA information in the new Verification Tracking Group (V5) that was not verified in the prior Verification Tracking Group to which the student was initially assigned.

Also, if verification was not completed for the previously assigned Verification Tracking Group (V1, V4, or V6) prior to the student being assigned to Verification Tracking Group V5, the student only has to verify the FAFSA information required for Verification Tracking Group V5. (Section 668.56) [Guidance issued 7/7/2015; revised 2/23/2016]

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General Questions (VER)

VER-Q1. Where can I find guidance on the verification requirements?

VER-A1. The following resources provide guidance on the verification requirements:

General

2012-2013 Award Year Archived

2013-2014 Award Year Archived

2014-2015 Award Year Archived

2015-2016 Award Year Archived

2016-2017 Award Year Archived

2017-2018 Award Year

2018-2019 Award Year

2019-2020 Award Year

VER-Q2. Does the use of professional judgment by a financial aid administrator (FAA) automatically require an applicant to be selected for verification by the institution, therefore requiring the institution to complete verification prior to making a professional judgment decision?

VER-A2. No. An institution is only required to complete verification prior to making professional judgment adjustments when the applicant's FAFSA information has been selected for verification by the Department or by the institution. (Section 668.53) [Guidance issued 01/26/2012]

VER-Q3. Are adjustments to an applicant's FAFSA information that are based on professional judgment selected for verification?

VER-A3. Archived

VER-Q4. May an institution delay disbursing Title IV student financial assistance until the institution completes verification of the FAFSA information it selected beyond the items required by the Department?

VER-A4. It depends on the FAFSA information that has been selected for verification. An institution may delay disbursing Title IV student financial assistance if the FAFSA information that it has required to be verified would impact the applicant's Title IV student aid eligibility. For example, while not required by the Department, the institution requires verification of an applicant's claim that she is an emancipated minor and thus is independent. Because the result of verification could change the applicant's dependency status and, therefore, her Title IV eligibility, the institution may delay disbursing the federal aid until the question of emancipation has been verified.

However, if the item(s) the institution selects for verification would not impact the applicant's eligibility for Title IV student financial assistance, the institution may not delay disbursing Title IV student financial assistance until verification of those items is completed. For example, the institution requires verification of home equity to determine the applicant's eligibility for state or institutional aid. Because there will be no impact on the applicant's Title IV eligibility regardless of the result of verification, disbursement of Title IV aid may not be delayed while waiting for verification of home equity. (Section 668.58(a)) [Guidance issued 01/26/2012]

VER-Q5. Are Quality Assurance (QA) institutions exempt from the new verification rules beginning with the 2012-2013 award year?

VER-A5. Archived

VER-Q6. Must an institution complete verification for selected applicants who will receive aid only from the unsubsidized Title IV student aid programs and are not eligible for any aid from the Title IV subsidized student aid programs?

VER-A6. No. An institution is not required to complete verification for applicants who are only eligible for aid from the unsubsidized Title IV student aid programs, i.e., Direct Unsubsidized Loans and PLUS Loans, and who are not eligible for any aid from the subsidized Title IV student aid programs. [Section 668.54(b)(1)(iii)] [Guidance issued 03/13/2012; revised 7/7/2015]

VER-Q7. Must an institution complete verification for a selected applicant who is eligible for both subsidized and unsubsidized Title IV student aid when the applicant chooses not to accept the subsidized aid?

VER-A7. An applicant who is eligible for subsidized and unsubsidized Title IV student aid may not avoid completing verification by accepting only the unsubsidized Title IV student aid. In such a case, the institution must complete verification for the applicant to be eligible for any Title IV student aid.

However, except for applicants who are in Verification Tracking Group V4 or V5, an institution may, on a case by case documented basis, disburse unsubsidized Title IV aid to those applicants who are selected for Verification Tracking Group V1 if the institution has determined that there will be a delay in the completion of verification. Also refer to Electronic Announcement dated October 31, 2016. [Sections 668.51(a), 668.54(b)(1)(ii) and (iii)] [Guidance issued 03/13/2012; revised 12/08/2017]

VER-Q8. How should an institution proceed if a selected applicant receives unsubsidized student financial assistance during the first half of the award year, but is later awarded subsidized student financial assistance (i.e., FWS or Perkins Loans) for the second half of the award year?

VER-A8. The institution is not required to complete verification during the first half of the award year because the applicant was only receiving aid under the unsubsidized student financial assistance programs. However, once the institution awarded the applicant subsidized student financial assistance in the second half of the award year, the institution must complete verification for the entire award year according to the new verification regulations. [Sections 668.51(a), 668.54(b)(1)(ii) and (iii)] [Guidance issued 03/13/2012]

VER-Q9. Because graduate students are ineligible for need-based Title IV grants and will no longer be eligible to receive subsidized Direct Loans, are there any conditions under which graduate students' FAFSA information will need verification?

VER-A9. Since graduate students remain eligible for subsidized Title IV aid in the form of FWS and Perkins Loans, if the institution participates in one or both of those programs it is likely that at least some graduate students will need to be verified. Verification would be required if, under the institution's awarding policy for FWS and/or Perkins, the graduate student would be awarded aid under those programs. [Sections 668.51(a), 668.54(b)(1)(iii), 34 CFR 674.10(a)(1) and 34 CFR 675.10(a)] [Guidance issued 03/13/2012]

VER-Q10. Is it acceptable under an institution's FWS and Perkins awarding policy to exclude graduate students from consideration for those programs or to consider graduate students for those programs only after such assistance has been offered to eligible undergraduate students?

VER-A10. No. An institution is not allowed under its packaging policies to exclude eligible graduate students from consideration for assistance under the FWS or Perkins Loan programs or to consider eligible graduate students for assistance under those programs only after such assistance has been offered to eligible undergraduate students. The regulations provide that assistance under the FWS and Perkins Loan programs must be made reasonably available to all eligible students, including graduate students. [Sections 34 CFR 674.10(a)(1) and 34 CFR 675.10(a)] [Guidance issued 03/13/2012]

VER-Q11. May an institution disburse unsubsidized Title IV student aid, i.e., Direct Unsubsidized Loans and PLUS Loans, prior to completing verification for a selected applicant who is eligible for both subsidized and unsubsidized Title IV student aid?

VER-A11. Except for applicants who are in Verification Tracking Group V4 or V5, an institution may, on a case by case documented basis, disburse unsubsidized Title IV aid to those applicants who are selected for Verification Tracking Group V1 if the institution has determined that there will be a delay in the completion of verification. When determining the amount of the unsubsidized aid to be disbursed, the institution must ensure that the subsidized aid the applicant is estimated to receive is considered. After verification is completed, the institution must ensure that both the subsidized assistance and the unsubsidized assistance are adjusted, if necessary. Also refer to Electronic Announcement dated October 31, 2016. [Sections 668.51(a)] [Guidance issued 10/10/2012; revised 12/08/2017]

VER-Q12. Can an institution determine which of its staff are authorized to review the identity of an applicant selected for verification groups V4 or V5?

VER-A12. Archived

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Applicants Selected for Verification by the Department (DS)

DS-Q1. May an institution require an applicant who was selected for verification by the Department to verify other FAFSA information in addition to those items identified by the Department for the award year?

DS-A1. Archived

DS-Q2. When an applicant is not selected for verification by the Department on the applicant's initial transaction, is it possible for that applicant to be selected for verification by the Department on a subsequent transaction?

DS-A2. Archived

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Applicants Selected for Verification by the Institution (IS)

IS-Q1. May an institution select applicants for verification other than those selected by the Department?

IS-A1. Archived

IS-Q2. Must an institution require an applicant it selects for verification to verify all of the FAFSA information identified by the Department for the award year? Must the institution comply with the "acceptable documentation" requirements for the FAFSA information it selects for verification?

IS-A2. Archived

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Verification Items (VI)

VI-Q1. Are tax filers who filed or will file a tax return required to verify income earned from work?

VI-A1. No. Tax filers who filed or will file a tax return are not required to verify income earned from work. (Section 668.56) [Guidance issued 01/26/2012]

VI-Q2. Are institutions required to verify the receipt of - Supplemental Nutrition Assistance Program (SNAP) – Food Stamps - benefits that was reported on a verification worksheet or other documentation at the institution, but not reported on the applicant's FAFSA?

VI-A2. Archived

VI-Q3. Must an institution require an applicant selected for verification to verify receipt of SNAP benefits (food stamps) if the applicant or someone in the applicant's household, or if applicable, the applicant's parent's household, also reported receipt of one of the other means-tested federal benefits that would make the applicant eligible for one of the alternate EFC calculations?

VI-A3. Archived

VI-Q4. How are distributions from an Individual Retirement Account (IRA) handled by the FAFSA-IRS Data Retrieval Tool, and how should a school address any portion of such a distribution that is "rolled over" into another qualified IRA? How are distributions from pensions and other annuities treated?

VI-A4. IRS requirements, as discussed in IRS Publication 75 and IRS Publication 575, provide that most distributions from IRAs (as well as from most pensions and annuities) are treated as taxable income. However, those publications discuss allowing some or all of these distributions to be excluded from taxable income under certain conditions. If none of the exclusionary conditions apply, the tax filer is instructed to report the full amount of the distribution on IRS Form 1040 line 15b for an IRA distribution and line 16b for pensions and annuities. If, however, the tax filer is eligible to exclude some or all of the distributions, the IRS instructs the tax filer to enter the full amount of the distribution on IRS Form 1040 line 15a or 16a, as appropriate. The tax filer is then instructed to subtract from the amount in 15a or 16a any portion of the distribution that, under IRS rules, is exempt from being considered as taxable income. The difference is then reported on lines 15b or 16b, as appropriate, and becomes part of the taxable income and thus, part of the tax filer's adjusted gross income (AGI). If there are qualified rollovers, the IRS guidance tells the tax filer to enter the word "Rollover" on the tax return next to line 15b or 16b. Note that the corresponding IRA line items for an IRS Form 1040A are 11a and 11b for IRAs, and 12a and 12b for pensions and annuities.

The summary above is not provided as official IRS guidance. Tax filers should consult the IRS or their tax advisors for definitive guidance on the rules governing the treatment of IRAs and pensions and annuities for tax purposes.

FAFSA Requirements: Generally, amounts of any distributions that were excluded from taxable income under the IRS rules—the difference between line 15a and line 15b or between line 16a and 16b—are considered untaxed income for the purpose of calculating an applicant's expected family contribution (EFC), and therefore, should be reported on the FAFSA as responses to the IRA and pension questions. However, the calculation of an EFC allows for the exclusion of any amount of the distribution that is a rollover. Thus the FAFSA instructions tell the applicant to exclude rollover amounts when answering the above FAFSA questions. This guidance is also provided in Chapter 2 of the Department's Application and Verification Guide that is part of the Federal Student Aid Handbook.

IRS Data Retrieval Tool: Of course, the FAFSA-IRS Data Retrieval Tool cannot know if the word "Rollover" was included on the tax return. Therefore, it assumes that the total difference between the distribution reported on line 15a or 16a, and the taxable portion on line 15b or 16b is untaxed income for EFC purposes, and that amount will be transferred from the FAFSA-IRS Data Retrieval Tool into the FAFSA as untaxed income for IRA distributions or pension distributions.

The FAFSA applicant, the applicant's parent, or the institution may modify the amount that the FAFSA-IRS Data Retrieval Tool transferred into the FAFSA, if all or a portion of that amount should not be included as untaxed income because of a rollover. To support such a change, the institution must maintain documentation (see below) that the amount not included in the FAFSA was an amount that was the result of a rollover.

Beginning with the 2018-2019 FAFSA processing year, if the applicant or the applicant's parent indicate that the amount transferred from the IRS into the FAFSA for the IRA distributions field or pension distributions field includes a rollover, he/she will be required to provide the amount of the rollover in a new entry field.  Our system will then subtract the reported rollover amount from the amount of the IRA or pension distribution that was transferred from the IRS, and the result will be used in the calculation of the applicant’s EFC.

Verification Requirements: Since neither the information from the FAFSA-IRS Data Retrieval Tool nor an IRS Tax Return Transcript will include the tax filer's "Rollover" notation, to verify the amounts that should be included on the FAFSA, the institution must obtain a written statement from the tax filer indicating the amount of the distribution that was excluded because it was an authorized IRS rollover. Acceptable documentation could be a signed statement from the tax filer. Acceptable documentation could also be a notation by the tax filer on the IRS Tax Return Transcript that includes the word "Rollover" beside the applicable item(s) on the transcript, similar to the instructions provided for the IRS Form 1040 or 1040A. If the institution accepts as documentation of the rollover a notation on the IRS Tax Return Transcript, it must ensure that the notation is signed and dated by the tax filer.

If the IRA or pension distributions were the only tax information that was changed for tax filers who used the IRS DRT, an institution should accept from the tax filer a signed statement confirming that the IRA or pension distributions included a rollover.  A tax transcript would only be necessary if other IRS tax information was changed. [Guidance issued 05/04/2012; revised 12/08/2017]

VI-Q5. Must an institution complete verification of all FAFSA information identified by the Secretary in the July 13, 2011, Federal Register notice for selected applicants who are eligible for either of the alternate expected family contribution (EFC) calculations: Automatic Zero EFC (Auto Zero EFC) or Simplified Needs Test (SNT)?

VI-A5. Archived

VI-Q6. Are institutions required to verify the payment of Child Support that was reported on a verification worksheet or other documentation at the institution, but not reported on the applicant's FAFSA?

VI-A6. Archived

VI-Q7. Must an institution complete verification of all FAFSA information identified in Verification Tracking Groups V1 or V5 even if the selected applicant is eligible for either of the alternate expected family contribution (EFC) calculations: Automatic Zero EFC (Auto Zero EFC) or Simplified Needs Test (SNT)?

VI-A7. Archived

VI-Q8. What is the language in the "Statement of Educational Purpose" that institutions must use for students placed in Verification Tracking Groups V4 or V5?

VI-A8. Archived

VI-Q9. Must an institution complete verification of all FAFSA/ISIR information identified in Verification Tracking Groups V1, V4, V5 or V6, even if the selected applicant is eligible for either of the alternate expected family contribution (EFC) calculations: Automatic Zero EFC (Auto Zero EFC) or Simplified Needs Test (SNT)?

VI-A9. Generally, yes for SNT-eligible applicants and no for Auto Zero EFC-eligible applicants.

The only difference in the EFC calculation for SNT-eligible applicants is the elimination of assets, and assets are not required to be verified. Therefore, SNT-eligible applicants who are selected for verification must verify all relevant FAFSA/ISIR information related to the Verification Tracking Group they are placed in.

For Auto Zero EFC-eligible applicants placed in Verification Tracking Groups V1, V5 or V6 (for the 2014–2015 award year through the 2016–2017 award year), the FAFSA/ISIR information that must be verified varies slightly between dependent and independent applicants.

For dependent applicants, only the following FAFSA/ISIR information must be verified:

  • The parents' AGI if they were tax filers;
  • The parents' income earned from work if they were nontax filers;
  • The applicant’s high school completion status and identity/statement of educational purpose, if placed in Verification Tracking Group V5; and
  • The receipt of SNAP benefits (food stamps) by any household member if the receipt of these benefits qualified the applicant for Auto Zero EFC.

For independent applicants, only the following FAFSA/ISIR information must be verified:

  • The applicant's and spouse's AGI if they were tax filers;
  • The applicant's and spouse's income earned from work, if they were nontax filers;
  • The applicant’s high school completion status and identity/statement of educational purpose, if placed in Verification Tracking Group V5;
  • The number of household members to determine if the independent applicant has one or more dependents other than a spouse; and
  • The receipt of SNAP benefits (food stamps) by any household member if the receipt of these benefits qualified the applicant for Auto Zero EFC.

For all Auto Zero EFC-eligible applicants placed in Verification Tracking Group V4:

  • The applicant’s high school completion status and identity/statement of educational purpose; and
  • The receipt of SNAP benefits (food stamps) by any household member if the receipt of these benefits qualified the applicant for Auto Zero EFC.

The guidance above continues to apply for the 2017–2018 and subsequent award years, except applicants are no longer assigned to Verification Tracking Group V6 and SNAP is no longer a verifiable item. [Section 668.56] [Guidance issued 05/02/2014; revised 3/21/2017]

VI-Q10.  What FAFSA/ISIR information must be verified if an institution receives an ISIR with an IRS Request Flag value of 07?

VI-A10.  An IRS Request Flag with a value of 07 indicates that the applicant or parent filed an amended tax return. Therefore, if an institution receives an ISIR with an IRS Request Flag value of 07, it must contact the applicant to obtain the documentation needed to make changes to any of the FAFSA/ISIR data items that were amended, regardless of whether those items are required to be verified.   [Guidance issued 12/08/2017; and applies beginning with the 2018-2019 FAFSA processing year]

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Updating Applicant's FAFSA Information (UPD)

UPD-Q1. When an FAA updates an applicant's marital status "to address an inequity or to reflect more accurately the applicant's ability to pay" under §668.55(c), what other information must also be updated?

UPD-A1. Usually when the applicant's marital status changes, there is no updating of the applicant's dependency status or, for applicants selected for verification, household size or number in college. However, under §668.55(c), an FAA may update the applicant's FAFSA information due to a change in the applicant's marital status if the FAA determines it is necessary to address an inequity or to reflect more accurately the applicant's ability to pay.

If an FAA chooses to exercise the authority allowed under §668.55(c), all relevant FAFSA information must be updated to be consistent with the new marital status, including the spouse's financial information, for applicants whose dependency status changes, or for applicants who are selected for verification. The FAA updates these applicants' marital status on a case-by-case basis and must document the reason for the decision.

Likewise, for an applicant who was independent only because he or she was married when the FAFSA was first completed, if the FAA changes the applicant's marital status to unmarried, making the applicant dependent, the FAFSA must be updated with parental information. [Section 668.55(c)] [Guidance issued 01/26/2012; revised 03/13/2012]

UPD-Q2. What happens when a change to an applicant's marital status is made?

UPD-A2. When an applicant's marital status is updated, the Department's Central Processing System (CPS) will reject the resulting transaction. The FAA may use FAA Access to CPS Online to enter an FAA-only reject override that will result in a new transaction with the updated dependency status. [ISIR Guide] [Guidance issued 03/13/2012; revised 04/04/2014]

UPD-Q3. If an applicant changes his or her marital status on the FAFSA and the institution agrees with the change by overriding the reject, must the institution recalculate the applicant's need-based aid based on the new Expected Family Contribution (EFC)?

UPD-A3. In almost all cases, a change in a student's marital status will change his or her EFC, and there can be only one EFC for a student for an award year (except when he or she becomes a graduate student during the award year). Therefore, the new EFC must be used to calculate the student's eligibility for all Federal student aid for the award year, which may require recalculating aid that was awarded or disbursed based on the earlier EFC. Adjustments to aid that has already been disbursed is not required if the student is no longer enrolled at the institution for the award year, unless the student subsequently reenrolls during the award year. For example, a dependent student who was awarded aid at School A leaves to get married and then enrolls at School B. The student then requests to be treated as married, and School B agrees and submits the override to CPS. While School B must use the new EFC for any aid it will award, School A does not need to recalculate the awards it made and disbursed, unless the student returns during the award year. [Guidance issued 05/02/2014]

UPD-Q4. If an institution decides to update a student’s marital status, must it first complete verification if the student had been selected for verification under the current marital status?

UPD-A4. No. This is not a case of an institution having to perform verification before making professional judgment changes to the FAFSA. If an institution determines that updating a student’s marital status is warranted—i.e., necessary to address an inequity or to reflect more accurately the applicant’s ability to pay—it should change the student’s marital status and other relevant data first and then complete verification of the updated application, which would include verifying the information of the student’s spouse or parents, as appropriate. [Guidance issued 09/03/2014]

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Acceptable Documentation for FAFSA Information Selected for Verification (DOC)

DOC-Q1. How can the IRS Data Retrieval Process be used to satisfy the verification requirement if the tax filer has not filed an income tax return at the time of completing the FAFSA?

DOC-A1. Archived

DOC-Q2. What documentation must be collected from an applicant who was selected for verification if the applicant and/or spouse, or parent(s) filed an amended tax return with the IRS?

DOC-A2. The Department's objective is to ensure that Title IV aid eligibility determinations are made based on the most accurate information possible. The FAFSA on the Web IRS Data Retrieval Tool (DRT) will only transfer certain tax information from an original tax return and none of the tax information from an amended tax return will be included.  However, beginning with the 2018-2019 FAFSA processing year, the ISIR will indicate that the return was amended.  Therefore, when an institution is aware that an amended tax return was filed, the institution must submit to the Secretary any changes to a nondollar item, or a single dollar item of $25 or more.
The institution must obtain a signed copy of the IRS Form 1040X that was filed with the IRS, in addition to one of the following—

  • IRS DRT information on an ISIR record with all tax information from the original tax return; or
  • an IRS Tax Return Transcript (that will only include information from the original tax return and does not have to be signed), or any other IRS tax transcript(s) that include all of the income and tax information required to be verified.

Note that there may be rare cases when an applicant and/or spouse, or parent(s) did not file an IRS Form 1040X with the IRS, but whose tax and income information was amended by the IRS. In these limited cases, an institution may accept documentation that include the change(s) made by the IRS, in addition to one of the items mentioned above. [Guidance issued 01/26/2012; revised 1/25/2018]

DOC-Q3. May an applicant have an IRS Tax Return Transcript sent directly to a college or university?

DOC-A3. Archived

DOC-Q4. May an institution decide what documentation is acceptable for its institutionally selected applicants?

DOC-A4. Archived

DOC-Q5. Is the information provided on a verification worksheet or other documentation at the institution sufficient to verify household size, number in college, or income earned from work for nontax filers; since the applicant signs the verification worksheet or other documentation submitted to the institution acknowledging that the information is correct?

DOC-A5. A verification worksheet or other documentation at the institution may serve as the signed statement to verify household size, number in college, or income earned from work for nontax filers, as long as the worksheet or other documentation has a certification statement similar to what is included on the Department's suggested verification text. An institution is not required to use the suggested verification text developed by the Department. It may use its own worksheet or require other documentation. [Guidance issued 01/26/2012; revised 12/08/2017]

DOC-Q6. What documentation must be collected from an applicant who was selected for verification and whose Institutional Student Information Record (ISIR) shows receipt of Food Stamps – Supplemental Nutrition Assistance Program (SNAP)?

DOC-A6. Archived

DOC-Q7. For verification of nontax filer wages, are institutions required to collect both the W-2(s) from all employers and the signed statement certifying that the individual has not filed and is not required to file an income tax return, listing all income and sources?

DOC-A7. Archived

DOC-Q8. For verifying child support paid, please clarify whether the institution is required to obtain the signature of the person who paid the child support?

DOC-A8. Archived

DOC-Q9. May an institution accept or make a copy of an IRS transcript that was originally obtained from the IRS?

DOC-A9. Archived

DOC-Q10. May an institution use a Record of Account Transcript, a Return Transcript for Taxpayer (RTFTP), or an Information Returns Processing Transcript Request - Wages (IRPTR-W) provided by the IRS to meet the verification requirements?

DOC-A10. An institution may accept as verification documentation any IRS tax transcript that includes all of the income and tax information required to be verified: adjusted gross income (AGI), U.S. income tax paid, Untaxed IRA Distributions, Untaxed Pensions, Education Credits, IRA Deductions and Tax Exempt Interest. Therefore, because the Record of Account Transcript and the Return Transcript for Taxpayer (RTFTP) includes all of the above noted information, either document may be used to meet the verification requirements. The Information Returns Processing Transcript Request - Wages (IRPTR-W) only provides wage information and therefore can only be used in lieu of an IRS W-2 form. [Section 668.57(a)(1)(i)] [Guidance issued 05/04/2012; revised 3/21/2017]

DOC-Q11. In some cases, tax filers who have visited an IRS field office have been provided with a copy of their IRS tax return stamped "official" in lieu of an IRS Tax Return Transcript. May an institution use an IRS tax return that has been stamped "official" by the IRS as a substitute for an IRS Tax Return Transcript to meet the verification requirements?

DOC-A11. Archived

DOC-Q12. May an institution meet the signature requirements for verification documentation submitted by an applicant, parent or spouse through an electronic process?

DOC-A12. For verification documentation purposes, an institution may collect an electronic signature for an applicant, parent or spouse if the process for obtaining the electronic signature includes assurances that the person providing the electronic signature is the person whose signature is being collected. Often, this is accomplished through a PIN or password process where the PIN or password has been assigned only after authentication of the identity of the person to whom the PIN or password is assigned. [Guidance issued 06/21/2012]

DOC-Q13. Is there an instance when an IRS Request Flag code of "02" would not carry forward to a subsequent transaction?

DOC-A13. Archived

DOC-Q14. What tax information should an institution use when both the IRS Data Retrieval Tool is used and an IRS Tax Return Transcript is obtained?

DOC-A14. Archived

DOC-Q15. What documentation is required for an applicant, parent or spouse who is the victim of identity theft and, as a result, is unable to use the IRS Data Retrieval Tool or obtain an IRS Tax Return Transcript until the matter has been resolved by the IRS?

DOC-A15. Archived

DOC-Q16. May an institution require an individual who has been granted a tax filing extension by the IRS to use the IRS Data Retrieval Tool (IRS DRT) or obtain an IRS Tax Return Transcript before completing verification? Must the tax return information be submitted to the institution after the income tax return has been filed?

DOC-A16. An institution may not delay completing verification for an applicant when a tax filing extension has been granted by the IRS. The income and tax verification regulatory requirements are met if a tax filer who has been granted a filing extension by the IRS provides the institution with the acceptable documentation consistent with the verification documents published in the Free Application for Federal Student Aid (FAFSA®) Information To Be Verified Federal Register notice for the applicable award year, e.g. a copy of IRS Form 4868 and a copy of IRS Form W–2 for each source of employment income received for the tax year.  This provision provides extension filers with a timely alternative to complete the verification process to avoid delaying the applicant's receipt of aid because of the IRS granted extension. For an individual who was called up for active duty or for qualifying National Guard duty during a war or other military operation or national emergency, in lieu of IRS Form 4868, an institution must accept a signed statement from the individual certifying that he or she has not filed an income tax return or a request for a filing extension because of that service. Beginning with the 2018-2019 award year, a signature is no longer required on the statement. (see final regulations published on September 29, 2017 [PDF]).

While submission of the documentation mentioned above meets the verification requirements and allows Title IV aid to be disbursed, an institution may require an individual granted an IRS tax filing extension to submit, after the tax return is filed, tax return information using the IRS DRT, or by submitting an IRS Tax Return Transcript within the deadline it established that is consistent with the deadline to submit verification documents published in the annual deadline dates Federal Register notice. However, beginning with the 2018-2019 award year, individuals who have only been granted an automatic six-month extension by the IRS must verify income and tax information either by using the IRS Data Retrieval Tool or by submitting to the institution an IRS Tax Return Transcript.  If the required documentation is not submitted by the institution's established deadline, the student must return all Title IV aid (Federal Pell Grant, FSEOG, IASG, TEACH Grant, or Perkins Loan) disbursed before the student was selected, except for Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Federal Work Study (FWS) wages earned. No further disbursements of Title IV aid can be disbursed and no further Federal Work Study (FWS) employment may occur for that award year. However, an institution may not apply this provision to individuals granted a filing extension beyond the institution's established deadline because the individual was called up for active duty or for qualifying National Guard duty during a war or other military operation or national emergency. [Section 668.57 and 668.60] [Guidance issued 04/25/2013; revised 1/25/2018]

DOC-Q17. Can an institution rely on documentation of a student's high school completion status or documentation that a student has the equivalency of a high school diploma that it collected for purposes other than completing verification to verify a student's high school completion status?

DOC-A17. Archived

DOC-Q18. Must an institution complete verification for students placed in verification groups V4 or V5 who are only eligible for unsubsidized student financial assistance?

DOC-A18. An institution should verify only high school completion and identity/statement of educational purpose for a student who is only eligible for unsubsidized student financial assistance and who was placed in Verification Tracking Groups V4 or V5 (see the exception for high school completion for a graduate student under Q&A DOC-Q31/A31). This will help ensure that only eligible students receive aid and will improve the integrity of the Title IV, HEA programs. Institutions need not verify any of the other FAFSA information listed under Verification Tracking Group V5 for such students. [Guidance issued 04/25/2013; revised 1/13/2017]

DOC-Q19. Are high school diplomas from other countries acceptable documentation to verify a student's high school completion status?

DOC-A19. Archived

DOC-Q20. What must institutions collect when a student established Title IV eligibility under one of the ability-to-benefit (ATB) alternatives but is selected under verification groups V4 or V5 to verify the student's high school completion status?

DOC-A20. Archived

DOC-Q21. After a tax filer uses the IRS Data Retrieval Tool (IRS DRT) and the ISIR shows an IRS Request Flag code of '02' (IRS data were imported to the FAFSA and not changed), he or she makes a correction to one or more of the items that were imported (e.g., the amount for Untaxed IRA Distributions). The resulting CPS transaction would no longer have an IRS Request Flag code of '02'. Does the institution need to require the student to submit an IRS Tax Return Transcript to verify all of the IRS-related verification items, or can it use the original unchanged values and only verify the changed value?

DOC-A21. Archived

DOC-Q22. Is further verification needed to resolve differences between what was included on the ISIR and what the student provided as part of the verification process?

DOC-A22. No, unless the institution has reason to believe that the information provided on a verification document is inaccurate. When an institution obtains acceptable documentation for a verification item, that documentation will either confirm that the information on the ISIR is correct or be used to make changes to the ISIR. For example, if upon reviewing an IRS Tax Return Transcript, the institution finds that the AGI amount from the transcript differs from what was reported on the FAFSA and shown on the ISIR, the institution simply submits a change to the CPS (or directs the student to do so). The institution need not attempt to determine the reason for the difference. [Guidance issued 05/02/2014]

DOC-Q23. What is IRS identity theft for purposes of submitting the alternative verification documentation discussed in Dear Colleague Letter GEN-13-16 posted to IFAP on June 13, 2013 and in Dear Colleague Letter GEN-14-05 posted to IFAP on March 25, 2014?

DOC-A23. IRS identity theft is identity theft that has affected a tax filer’s IRS tax records. The IRS refers to this as Tax Administration Identity Theft. This occurs most often when someone other than the tax filer files a tax return using the tax filer’s identifiers – usually to fraudulently receive a tax refund. The tax filer may be the first to identify the identity theft or the IRS may be the first to suspect that there has been Tax Administration Identity Theft. Only a determination by the IRS of a “Tax Administration Identity Theft” is applicable for purposes of completing verification for Federal student aid eligibility.

While the IRS may acknowledge Non-Tax Administration Identity Theft, such an acknowledgement is not applicable for verification. Examples of a Non-Tax Administration Identity Theft are identity thefts that are a result of a privacy breach at a bank, credit card company, retail or web business, or because of lost or stolen identity documents. Victims of Non-Tax Administration Identity Thefts, even if reported to the IRS, may not submit the alternative documentation discussed in Dear Colleague Letters GEN-13-16 and GEN-14-05 to complete verification. [Guidance issued 09/03/2014]

DOC-Q24. If, prior to the March 25, 2014, release of the 2014-2015 identity theft guidance provided in Dear Colleague Letter GEN-14-05, an institution completed verification for 2014-2015 using the identity theft guidance provided in Dear Colleague Letter GEN-13-16, must the institution re-verify the student for 2014-2015 following the guidance in Dear Colleague Letter GEN-14-05?

DOC-A24. Archived.

DOC-Q25. If a student who reported an item on the FAFSA, such as SNAP or child support, then later informs the institution that he or she did not receive the item, must an institution obtain documentation from the student confirming non-receipt of that item?

DOC-A25. Archived

DOC-Q26. Is a government-issued photo identification that is not compliant with the REAL ID Act of 2005, e.g., one marked “not for federal identification,” acceptable documentation for an applicant selected to verify identity/statement of educational purpose?

DOC-A26. Archived

DOC-Q27. What documentation is required for an applicant, parent or spouse who is the victim of IRS tax-related identity theft?

DOC-A27. Archived

DOC-Q28. Institutions may only accept a signed copy of a non IRS income tax return for tax filers who are unable to obtain a free copy of their tax account information. Which tax authorities charge a fee to obtain this information?

DOC-A28. The tax authorities for Guam, the Commonwealth of the Northern Mariana Islands, the Commonwealth of Puerto Rico and the U.S. Virgin Islands charge a fee to obtain tax account information. Therefore, a tax filer who filed an income tax return with these tax authorities may provide institutions with a signed copy of his or her income tax return that was filed with the relevant tax authority. However, if the institution questions the accuracy of the information on the signed copy of the income tax return, the tax filer must provide the institution with a copy of the tax account information issued by the relevant tax authority before verification can be completed.

A tax filer who filed an income tax return with the Internal Revenue Service or the tax authority for American Samoa must provide institutions with a copy of his or her tax account information if selected for verification since these tax authorities do not charge a fee to obtain this information.

A tax filer who filed an income tax return with tax authorities not mentioned above, i.e. a foreign tax authority, and who indicates that he or she is unable to obtain the tax account information free of charge, must provide the institution with documentation that the tax authority charges a fee to obtain that information, along with a signed copy of his or her income tax return that was filed with the relevant tax authority. [Guidance issued 6/7/2016]

DOC-Q29. Since a Social Security Number, an Individual Taxpayer Identification Number, or an Employer Identification Number is required to obtain a verification of nonfiling from the IRS, how can a nontax filer without one of these identifiers meet the verification requirement to obtain confirmation of nonfiling from the IRS?

DOC-A29. We are aware of circumstances where one or both of the parents of a dependent student or the spouse of an independent student does not have a Social Security Number, an Individual Taxpayer Identification Number, or an Employer Identification Number and therefore is unable to obtain a verification of nonfiling from the IRS. Individuals in these cases and whose income is below the IRS filing threshold must submit to the institution:

  • A signed and dated statement--
    • Certifying that the individual(s) does not have a Social Security Number, an Individual Taxpayer Identification Number, or an Employer Identification Number; and
    • Listing the sources and amounts of earnings, other income, and resources that supported the individual(s) for the appropriate tax year; and
  • If applicable, a copy of IRS Form W–2 for each source of employment income received for the appropriate tax year or an equivalent document.

Note: Individuals who submit W-2s that total a gross income that equals or exceeds the IRS tax filing threshold must request a Social Security Number, an Individual Taxpayer Identification Number, or an Employer Identification Number and file an income tax return before the student is eligible to receive Title IV aid. [Guidance issued 10/6/2016; and applies beginning with the 2017-2018 award year]

DOC-Q30. The Department has provided guidance on how to obtain verification of non-filing from the IRS. What do individuals who are subject to foreign tax authorities do?

DOC-A30. If another tax authority can provide documentation similar to the IRS that indicates the individual did not file taxes for the appropriate tax year, we expect the individual to request such documentation and provide it to the institution. If such documentation does not exist, or if the individual is unable to obtain the documentation, the institution may accept a signed and dated statement from the individual stating either that the tax authority does not provide such documentation or that the individual was unable to obtain the documentation after contacting the tax authority.

Since nontax filers selected for verification are already required to provide a signed and dated statement related to their claim of being a nonfiler, those nontax filers may also include in that statement the attestation specified above. [Guidance issued 1/13/2017; and applies beginning with the 2017-2018 award year]

DOC-Q31. Must an institution collect documentation of an applicant’s high school completion status for graduate students placed in Verification Tracking Groups V4 or V5?

DOC-A31. An institution is not required to collect proof of high school status if admission into the graduate program requires the completion of at least two years of undergraduate coursework as provided in Q&A RED-Q1/A1. [Guidance issued 1/13/2017]

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Changing Applicant's FAFSA Information (CHD)

CHD-Q1. Is an institution required to submit changes to a FAFSA dollar item that is less than $25 if the institution has to submit a change to a nondollar item? What if the other item is a dollar item where the change is $25 or more?

CHD-A1. Yes. If an institution is required to submit any change as a result of verification it must submit all changes. For example, if there is a change in number of family members and also a change in the Education Credit amount of only $15, the institution must submit both changes to the CPS even though the difference in the amount of the Education Credit is less than the $25 tolerance. Likewise, if, for example, the difference for AGI is $100, and the difference for taxes paid is $20, the institution must submit both the AGI and the taxes paid changes, not just the AGI change that exceeded the $25 tolerance. [Section 668.59] [Guidance issued 06/21/2012]

CHD-Q2. Since IRA rollovers are not reflected on the IRS Tax Return Transcript or transferred into an online FAFSA using the IRS Data Retrieval Process, is changing the FAFSA to reflect the rollover exclusion a "correction," an "update" or "professional judgment?"

CHD-A2. Archived

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Program Integrity Q&A | Verification-Archived Guidance



   
Last Modified: 06/13/2018