If there ever was a real-world example of why we must be need analysis experts and super sleuths — this is it! We first heard about this issue in a March 2021 Electronic Announcement after several financial aid administrators questioned the accuracy of the data provided by the IRS Data Retrieval Tool (DRT). The problem stemmed from confusion over the Internal Revenue Service’s (IRS) Non-Filers: Enter Payment Info Here Tool. The tool was developed for people who wouldn’t normally file a tax return, but who were applying for Economic Stimulus Payments. However, some tax filers used the tool in error and then subsequently filed a tax return resulting in the DRT reporting a $1 adjusted gross income (AGI) in the Free Application for Federal Student Aid (FAFSA). A new Electronic Announcement in September shared the bad news that although the IRS had updated the portal, there were still instances of the $1 AGI being reported for the 2022-2023 award year although, on the bright side, there are far fewer students impacted.
The only way to resolve the issue is to collect an official copy of the 2019 or 2020 federal tax return to be able to confirm the actual AGI. The initial guidance required the student and/or parent to request a Record of Account from the IRS to submit to the institution. However, in its January 13 update, FSA confirmed filers can follow established procedures to request a 1722 letter or an IRS account print out as their tax return transcript.
Cheers to the administrators who questioned the DRT provided information and reported the issue so there was adequate time to make corrections before the end of the 2021-2022 academic year and ahead of the 2022-2023 academic year. Because AGI is one of the components used to calculate EFC, if not corrected timely, students may have been awarded Pell Grants or other need-based funds erroneously creating a compliance problem.
We recognize the additional verification cases are a burden on the Financial Aid Office, so if you could use an extra set of hands, don’t hesitate to contact us at email@example.com.