Verification Changes For 2014-15 Jamie A. Malone U.S. Department of Education

1. Verification Changes For 2014-15Jamie A. MaloneU.S. Department of Education

2. Verification Selection CPS applies risk model to FAFSA data • Goal is to target verification based upon most error prone data items specific to an applicant • Non-selected applicants are again subject to risk model when submitting corrections • Corrections flagged as PJ are not subject to verification edits • Adding/deleting a school code can trigger a verification selection

3. 2014-15 Verification Verification items June 13, 2013 Federal Register • Retained all items subject to verification in 2013-14 • DCL GEN-13-16, June 13, 2013 • Added new tracking group • Household Resources

4. 2014-15 Verification Tracking Groups Verification Tracking Groups Each group has specified verification items • V1 • V3 • V4 • V5 • V6 • Student stays in same group, regardless of ISIR corrections

5. Group Number Will Show As Verification Tracking FLAG on ISIR

6. Verification Flags On ISIR Verification Flag Y = selected for verification N = not selected for verification • = selected for verification on a subsequent transaction Verification Selection Flag Blank = transaction not selected for verification Y = transaction now selected for verification when transaction being corrected was not selected

8. 2014-15 Verification ED will not publish a Verification Worksheet • Use suggested text that will be provided in upcoming IFAP Electronic Announcement • IRS request instructions attached to DCL GEN-13-16 • Do not send families to IRS office to request transcripts

9. Verification Exclusions No Verification Required • Student dies • Student receives no Title IV aid • Student eligible only for unsubsidized aid • Transfer student who completed verification at previous school and current school can obtain certification with ISIR transaction number from previous school

10. Verification Exclusions Verification of parental information not required- • Parents cannot be reached by normal means of communication • Both parents are mentally incapacitated Verification of student’s spouse’s information not required- • Spouse is deceased • Spouse is mentally incapacitated • Spouse cannot be reached by normal means of communication

11. Verification & Professional Judgment • Regulation codifies FSA policy that all applicants selected for verification must complete verification before any PJ adjustments to FAFSA are made • Refers to HEA section 479A(a) • Statement must be included in school’s written policies and procedures about verification

12. V1 Standard Tax Filers • Adjusted Gross Income • U.S. Income Tax Paid • Untaxed Portions of IRA Distributions • Untaxed Portions of Pensions • IRA Deductions and Payments • Tax Exempt Interest Income • Education Credits • Number of Household Members • Number in College • And if included on ISIR- • Supplemental Nutrition Assistance Program (SNAP – Food Stamps) • Child Support Paid

13. V1 Standard Non Tax Filers • Income Earned from Work • Number of Household Members • Number in College • And if included on ISIR • Supplemental Nutrition Assistance Program (SNAP-Food Stamps) • Child Support Paid

14. V3 Child Support Paid • Child Support Paid by the student (or spouse), the student’s parent or both

15. V4 Custom • High School Completion Status • Identity/Statement of Educational Purpose • And if included on ISIR • Supplemental Nutrition Assistance Program (SNAP-Food Stamps) • Child Support Paid

16. V5 Aggregate • High School Completion Status • Identity/Statement of Educational Purpose AND • All items indicated in V1 • Tax Filer • Non-Tax Filer

17. V6 Household Resources For both tax filers and nontax filers: • All items indicated in V1 AND • Other Untaxed Income on the 2014–2015 FAFSA– • Payments to tax-deferred pension and savings (Questions 45a and 94a) • Child support received (Questions 45c and 94c) • Housing, food and other living allowances paid to members of the military, clergy and others (Questions 45g and 94g) • Veterans noneducation benefits (Questions 45h and 94h) • Other untaxed income (Questions 45i and 94i) • Money received or paid on the applicant’s behalf (Question 45j)

18. DOCUMENTATION

19. Acceptable DocumentationFor Items on 2013 Tax Return • Information obtained through IRS data retrieval on FOTW • IRS Request Flag value of 02 ORone of the following-- • Tax Return transcript obtained from the IRS • Record of Account Transcript obtained from the IRS • Return Transcript for Taxpayer (RTFTP) obtained from the IRS

20. 2014-15 IRS Data Retrieval IRS Data Retrieval will populate on FOTW- • Adjusted Gross Income • U.S. Income Tax Paid • Untaxed Portions of IRA Distributions • Untaxed Portions of Pensions • IRS Deductions and Payments • Tax Exempt Interest Income • Education Credits • School must have code 02

22. 2014-15 IRS Data Retrieval CANNOT BE USED when- • Married independent student and spouse filed separate tax returns • Married parents of dependent student filed separate tax returns • When dependent student’s parents are unmarried and living together • When student or parent had marital status change after 12/31/13 • When student, spouse, or parent filed an amended tax return – 1040X

23. From Program Integrity Q&A Question- What if school has both IRS data retrieval information and the IRS Tax Return Transcript? Answer- If any “per computer” amount on Tax Return Transcript differs from data retrieval amount by $25.00 or more, ISIR must be corrected.

24. Rollover On Tax Return IRS data retrieval will populate ISIR with untaxed income • You must collect- • Written statement from tax filer indicating the amount of the distribution that was excluded because it was an IRS authorized rollover OR • Signed and dated notation indicating “Rollover” on IRS Tax Return Transcript

25. 2014-15 Verification When is collection of a paper 2013 tax return acceptable? • Amended tax return was filed • Victim of IRS identity theft • Filed non-IRS income tax return

26. Amended Tax Returns Acceptable documentation • Signed copy of the amended tax return (1040 X) that was filed AND • Either a signed copy of the original tax return that was filed, an IRS tax return transcript, an IRS Record of Account Transcript, or a Return Transcript for Taxpayer (RTFTP)

27. Victims Of Identity Theft Collect a signed copy of the paper 2013 tax return that was filed AND a copy of IRS Form 14039 “Identity Theft Affidavit” • For taxpayer who does not have IRS Form 14039, collect either— • A signed and dated statement indicating tax filer was victim of IRS identity theft and that IRS is investigating. • Must include certification that taxpayer did file IRS Form 14039 and did not keep copy OR was not required to file such form OR • A copy of a police report related to identity theft filed by the tax filer

28. Taxpayer Has IRS Extension • Verification is complete if you have -- • Documentation of IRS extension for tax year 2013 & • 2013 W-2 forms or statement from self-employed individual • School may require an individual granted a tax filing extension to provide a copy of their completed and signed tax return when filed • If school receives a copy of the return, it MUST verify AGI and taxes paid • If school does not receive copy, may return all funds disbursed

29. IRS Tidbits • Changing “income earned from work” will NOT change the IRS data flag • IRS flags do NOT indicate who made change to data item

30. Acceptable Documentation Income earned from work for non-tax filer • Signed statement by earner certifying that he/she is not required to file an income tax return for 2013 • Documentation of sources and amounts of income- • W-2 Form OR • Signed statement explaining amount of income of earned, source of income, and reason why W-2 is not available in timely manner

31. 2014-15 Change for Non Tax Filers • Non tax filers are those individuals who state that they will not file a tax return for 2013 and are not required to file a tax return for 2013. • School must make sure person is not required to file per IRS rules • W-2 is required but if cannot be provided, school may accept signed statement certifying- • Amount of income earned from work • Source of income earned from work • Reason why W-2 is not available in timely manner

32. 2014-15 Change for Non Tax Filers • If school doubts claim that did not file tax return for 2013, school MUST require IRS “Verification of Nonfiling” • Request using IRS Form 4506-T, box 7 • IRS will not provide until after 6/15/14

33. Acceptable Documentation Number in Household • Signed statement • Includes name, age, and relationship to applicant

34. Exceptions to Household Size Verification • For dependent student when parents marital status is • separated or unmarried (single, divorced, or widowed) and family size on the FAFSA is 2 • married and family size on the FAFSA is 3 • For independent student who is • separated or unmarried (single, divorced, or widowed) with the family size on the FAFSA is 1 • married and the family size on the FAFSA is 2

35. 2014-15 Change For Household Size For dependent students • Must include both of dependent’s student legal (biological or adoptive) parents if parents live together, regardless of marital status or gender of parents

36. Acceptable Documentation Number in College • Signed statement • Name and age of each household member who is/will attend eligible postsecondary educational institution as at least a half-time student in 2013–2014 • Name of the eligible institution(s) that each household member is or will be attending during 2013–2014 • Not required if applicant is only member in college

37. Acceptable Documentation SNAP - Supplemental Nutrition Assistance Program (Food Stamps) - if receipt is indicated on the 2014-15 FAFSA • Documentation from the agency that issues the Food Stamps benefit or signed statement from parent/student that someone in FAFSA household received benefit in calendar year 2012 or 2013

38. Acceptable Documentation Child Support Paid - if reported on the 2014-15 FAFSA • Statement signed by child support payor or spouse- • Amount of child support paid • Name of the person to whom child support was paid and • Name of the children for whom child support was paid

39. 2014-15 Change For Child Support Paid • Schools may accept records of electronic payments as documentation that child support payments were made

40. From Program Integrity Q&A What should be done when FAFSA/ISIR does not reflect receipt of SNAP benefits, but verification documentation does reflect receipt? • Three Part Answer • If student qualified for simplified needs test or automatic zero EFC without receipt of SNAP, no change to ISIR is required. • If student could not have qualified for simplified needs test or automatic zero EFC because of income, no change to ISIR is required. • If after verification, it is determined that receipt of SNAP on ISIR will benefit student, school must change ISIR to reflect receipt.

41. High School Completion Status • High School Diploma • Copy of high school diploma • Copy of final high school transcript showing date completed secondary school education • Recognized Equivalent of High School Diploma • GED certificate • State certificate received after passing state authorized exam recognized by state as equivalent of high school diploma

42. High School Completion Status Recognized Equivalent of High School Diploma • Academic transcript showing successful completion of at least a two year program acceptable for full credit toward a bachelor’s degree • For associate degree or higher, documentation showing the student did not graduate from but excelled academically in high school and meets all formalized, written admissions policies of postsecondary school

43. High School Completion Status Homeschool • Transcript or equivalent signed by parent/guardian that lists secondary school courses completed and documents successful completion of secondary school education • Secondary school completion credential for homeschool

44. High School Completion Status Foreign High School • If copy of diploma or transcript is not available, obtain copy of “secondary school leaving certificate” through appropriate governmental agency of the country (Ministry of Education) where secondary education was completed • You must determine if foreign secondary school credential is evidence of completion of equivalent of U.S. secondary education

45. 2014-15 Change For High School Completion Status • If school has obtained acceptable documentation of student’s high school completion status prior to verification selection in Group V4 or V5, that documentation does not need to be obtained again • High completion in a foreign country • If student cannot provide copy of diploma or transcript, school may accept copy of “secondary school leaving certificate” or other similar document obtained through appropriate government agency in country where high school was completed (ex: Ministry of Education)

46. Identity/Educational Purpose Documentation of identity/statement of educational purpose • Appear in person and present to an institutionally authorized individual-- • A valid government-issued photo identification (driver’s license, non-driver’s license, other State-issued identification, or passport); and • A signed statement of educational purpose

47. Identity/Educational Purpose Documentation of identity/statement of educational purpose • If unable to appear in person, must provide the institution • A copy of a valid government-issued photo identification (driver’s license, non-driver’s license, or passport); and • An original notarized statement of educational purpose signed by the applicant

48. Identity/Educational Purpose Documentation of identity/statement of educational purpose • School must maintain, an annotated copy of the identification submitted by the applicant that includes • The date documentation was received; and • The name of the institutionally-authorized individual that obtained the documentation

49. Required Verification Text Schools must use EXACT Department language for “Statement of Educational Purpose” • Provided in 6/13/13 Federal Register & IFAP Electronic Announcement to be posted

50. 2014-15 Change Identity/Statement Of Educational Purpose • School must obtain ORIGINAL signed statement of educational purpose • May convert to electronic record after examination for accuracy and completeness, for record retention purposes