Alternative Documentation for Verification

admin ., Compliance, File Review and Verification

Written by Brittany Barker, HEAG consultant, Email:

Collecting verification documentation from student’s and their parents has never been an easy task for financial aid administrators.  However, with the addition of the Data Retrieval Tool (DTR), it was anticipated that the population chosen for verification would drastically decrease. The DTR was designed to link information from the Internal Revenue Service (IRS) to the Free Application for Federal Student Aid (FAFSA) to insure data integrity. However, many students were unable to use the DTR option if taxes had not yet been filed, information was not identically transcribed, or if taxes had been filed incorrectly, just to name a few.  As a result, many students were still selected for verification.

Instead of supplying a signed copy of a tax return, students were required to request a tax transcript from the IRS.  Unfortunately, the processing time on this request has taken up to 6 weeks stalling a student’s ability to receive financial aid.  Due to immense feedback from the financial aid community, documentation alternatives to the tax transcript will likely be accepted in the coming weeks according to Deputy Assistant Secretary for Higher Education, Dr.  Debra Saunders-White.  However, it is important to note that students, in addition to alternative documentation, will need to supply confirmation that they have requested a tax transcript.  This could simply be a screen shot of the request.  More information about alternatives to the tax transcript was released in early November.

Acceptable Documentation Update for 2012-2013 Award Year Verification

By David A. Bergeron, Acting Assistant Secretary for Postsecondary Education; November 2, 2012

On April 16, 2012, we published Dear Colleague Letter GEN-12-07 that allowed, for a limited period of time, institutions to accept a signed copy of the relevant 2011 IRS Tax Return as acceptable verification documentation for the 2012-2013 award year from applicants who had attempted unsuccessfully to use the IRS Data Retrieval Tool (DRT) or to obtain an IRS Tax Return Transcript.  Institutions were reminded in an Electronic Announcement posted on July 20, 2012, that as of July 16, 2012, they must have been in compliance with the acceptable documentation requirements included in the July 13, 2011 Federal Register notice and in Dear Colleague Letter GEN-11-13.

We noted in the July 13, 2011 Federal Register notice and in Dear Colleague Letter GEN-11-13 that “In limited circumstances, if an institution determines that obtaining an IRS Tax Return Transcript is not possible, the institution may accept a signed copy of a 2011 income tax return, but it must document the reason for allowing an applicant to do so.”. Consistent with that provision in an August 21, 2012 Electronic Announcement, we provided guidance on some of the limited circumstances (e.g., identity theft, the filing of an amended tax return) where a signed copy of the tax return would remain as acceptable documentation.

Today’s Electronic Announcement informs institutions that the Department believes that, for the remainder of the 2012-2013 award year, the alternative documentation, as detailed below, is acceptable in instances where the tax filer had attempted to request an IRS Tax Return Transcript using the IRS paper or on-line request process but was unsuccessful.

Alternative Documentation:

  • A signed copy of the relevant (i.e., applicant, spouse, or parent) 2011 IRS tax return (IRS Form 1040, IRS Form 1040A, or IRS Form 1040EZ, as appropriate); and
  •  For tax filers who attempted to request an IRS Tax Return Transcript using the IRS paper Form 4506T-EZ or Form 4506-T transcript request process, a copy of the IRS response mailed to the tax filer informing the tax filer that the IRS could not provide the requested transcript.  The response must be signed by the tax filer; or
  • For tax filers who attempted to request an IRS Tax Return Transcript using the IRS on-line transcript process, a signed copy of a screen print from the official IRS Web page that displays a message indicating that the transcript request was unsuccessful.

Because the IRS does not provide written confirmation of the failure of a transcript request made using its telephone request process, there is no documentation alternative for that process.  Affected tax filers must attempt to request an IRS Tax Return Transcript using either the on-line or paper method, and if unsuccessful provide the institution with the above noted documentation.

IMPORTANT:  In addition to the documentation specified above, the tax filer also must provide to the institution a completed and signed IRS Form 4506T-EZ or IRS Form 4506-T that includes on line 5 the name, address, and telephone number of the institution as the third party to whom the IRS is to mail the Tax Return Transcript.  If there is no reasonable doubt about accuracy of the information on the submitted signed copy of the tax return, the institution should proceed with verification and simply place the IRS 4506 form in the file rather than sending it to the IRS.

However, if the institution has reason to believe that the information provided on the signed copy of the paper tax return may not be accurate, it must, before verification can be completed, send the IRS Form 4506T-EZ or Form 4506-T to the IRS and wait for the return by the IRS of the Tax Return Transcript or confirmation from the IRS that a transcript is not available for that tax filer.

Thank you for your continued cooperation and support as we work to ensure the integrity of the Title IV student aid process.