COLLEAGUE TO COLLEAGUE: unraveling and analyzing federal policy changes for verification

1. COLLEAGUE TO COLLEAGUE:unraveling and analyzing federal policy changes for verification SHARI AREHART Operations Analyst James Madison University

2. HIGHLIGHTS OF:NEW VERIFICATION REGULATIONS • Effective date for verification: July 1, 2012 • Eliminates the 30 percent institutional verification cap • Eliminates the $400.00 tolerance; replaces with $25.00 tolerance • Verification and “Official ISIR” received before completion of any Professional Judgment adjustments • Requires the processing of all changes and corrections to a student’s FAFSA information COLLEAGUE TO COLLEAGUE

3. HIGHLIGHTS OF:NEW VERIFICATION REGULATIONS • Replaces the standard five verification items with a “targeted selection of items”! • In English – “they choose and post - we verify” • The items to be verified and acceptable documentation can be found in the Federal Register COLLEAGUE TO COLLEAGUE

4. 2012-2013 TARGETED SELECTION OF VERIFICATION ITEMS ALL APPLICATIONS • Number in household • Number in college • Food Stamps (SNAP) – if reported on FAFSA • Child Support Paid – if reported on FAFSA COLLEAGUE TO COLLEAGUE

5. 2012-2013 targeted selection of verification items TAX FILERS AGI Taxes Paid Untaxed income items • Untaxed IRA distribution • Untaxed pensions • Education credits • IRA deductions • Tax exempt interest NON-TAX FILERS Income earned from work COLLEAGUE TO COLLEAGUE

6. NUMBER IN HOUSEHOLD “A signed statement” = Verification Worksheet • Name • Age • Relationship NUMBER IN COLLEGE “A signed statement” = Verification Worksheet • Name • Age • Eligible Institution ACCEPTABLE DOCUMENTATION Form needs to be signed by student and one parent (if dependent). No rule changes for who you can count in the house or in college.

7. FOOD STAMPS • Documentation from the agency that issues the Food Stamps • Alternative documentation that confirms receipt of Food Stamps in either 2010 or 2011 CHILD SUPPORT PAID • Signed statement certifying: • Amount paid • Recipient of payment • Name of child/children • Alternative documentation: • Separation agreement or divorce decree or • Signed statement from individual receiving child support including amount received or • Copy of support check ACCEPTABLE DOCUMENTATION

8. Tax filer information: simple • IRS Data Retrieval • Must have valid SSN • Must have filed a 2011 federal tax return • Must have unchanged marital status since December 31, 2011 • Without subsequent changes to ISIR ACCEPTABLE DOCUMENTATION

9. Tax filer information: complex • IRS Transcript and W-2 • Invalid SSN • Separated, divorced, widowed • Married filing separate or married to a different individual • Anytime FAFSA info doesn’t correlate with taxes! ACCEPTABLE DOCUMENTATION

10. TAX EXTENTIONS • IRS Form 4868 • W-2 • Signed statement by self-employed individual certifying AGI and US taxes paid NON-TAX FILERS • W-2 • Signed statement = Verification Worksheet indicating that they are not required to file and amount of income earned • Other income not reported on W-2 ACCEPTABLE DOCUMENTATION

11. Two major exceptions • If an institution determines that obtaining a transcript from the IRS is not possible, the institution may accept a copy of the signed 2011 income tax form. • If an individual who is required to submit a W-2 is unable to obtain one in a timely manner, the institution may accept a signed statement including: • Income earned from work • Source of income • Reason W-2 is not available in timely manner ACCEPTABLE DOCUMENTATION

12. IRS Tax Return Transcript Request Process • Online – www.irs.gov • Select “ Order a Tax Return or Account Transcript” • Click “Order a Transcript” • Enter needed basic information • Click “Continue” • Select “Return Transcript” • Should receive transcript 5-10 days • Cannot be sent directly to the school • Telephone – 1-800-908-9946 • Option 2 • Enter “2011” • Should receive transcript 5-10 days • Cannot be sent directly to the school • Paper - IRS Form 4506T-EZ • Use instead of the 4506-T • Download at http://www.irs.gov/pub/irs-pdf/f4560tez.pdf • Form can be mailed or faxed • Should receive transcript 5-10 days from the time the IRS receives and process the form • Problem – Line 5 of the form lets the parent send transcript to a third party. ACCEPTABLE DOCUMENTATION

13. Single parent Newlywed EXERCISE 1 W-2 Tax deferred pension (box 12) Free or reduced lunch Wages Dislocated worker TANF WHAT ELSE WILL YOU COLLECT??? Independent – under 24 Veterans non-education benefit Box 14 Code A Child support - received K-1 Form 1065 Clergy housing Supplemental security WIC

14. PLANNING FOR THE CHANGE VERIFICATION WORKFLOW By creating a workflow of your current verification processes – substituting in the new changes - you can understand the impact that these changes are going to have on your school. COLLEAGUE TO COLLEAGUE

15. Planning for the change COLLEAGUE TO COLLEAGUE

16. Planning for the change Timing constraints • Income tax filing • System delay – filed electronically vs paper • Additional documentation • Awarding DO YOU HAVE ENOUGH TIME?

17. Planning for the change Document Document P & P Document COLLEAGUE TO COLLEAGUE

18. PLANNING FOR THE CHANGE CHANGES TO POLICIES AND PROCEDURES • All Professional Judgments need to be verified – sent back to CPS (Central Processing Center) and returned with an “official” ISIR BEFORE any adjustments can be made! Updating dependency status for a change in a students marital status • If change in marital status creates an inequality or impacts the students ability to pay, schools may now choose to amend marital status. COLLEAGUE TO COLLEAGUE

19. EXERCISE 2 GETTING THE WORD OUT Yes! Go back into your FAFSA

20. Resources: where to go to get the actual rules! • Dear Colleague letters - http://ifap.ed.gov/ifap/byYear.jsp?type=dpcletters • - GEN-11-03, February 2011 • - GEN-11-13, July 2011 • Federal Register Notice: July 13, 2011 - http://ifap.ed.gov/fregisters/attachments/FR071311FAFSAInformation.pdf • Jacquelyn Butler, U.S. Department of Education, Office of Postsecondary Education, (202) 502-7890, jacquelyn.butler@ed.gov COLLEAGUE TO COLLEAGUE

21. COLLEAGUE TO COLLEAGUE QUESTIONS?