verification 1. verification - definitions subsidized student financial assistance programs...

Verification

1

Verification - Definitions

Subsidized student financial assistance programs

Verification applies to Title IV programs where eligibility based upon Expected Family Contribution

Pell, FSEOG, FWS, Perkins, Direct Subsidized Loan

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Verification - Definitions

Unsubsidized student financial assistance programs

Verification does not apply to Title IV programs where eligibility not basedUpon Expected Family Contribution

TEACH Grant, Direct Unsubsidized Loan, Direct PLUS Loan, Iraq and Afghanistan Service Grant

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Verification – Changes To FAFSA Information

For subsidized programs, all changes resulting from verification must be submitted to CPS if change is • To any non-dollar item or• A single dollar item of $25 or more

If required to submit one change, must submit all changes

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Verification & Professional Judgment • All applicants selected for verification (either

by ED or school) must complete verification before any PJ adjustments to FAFSA

• School’s written verification policies and procedures must include statement that no adjustments can be made until verification is completed

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Verification & Professional Judgment

If applicant NOT selected for verification: Verification NOT required May perform PJ as usual

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Verification Selection

• Institutions must verify all applicants selected by CPS for verification

- Removes institution’s option to verify only 30% of applicant pool

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Verification - ExclusionsNo verification required if –

Applicant is eligible to receive only unsubsidized aid Applicant received no aid for reasons other than

failure to complete verification Transfer student already completed verification for

the award year at a prior school• Current school must collect statement from prior

school, providing transaction number of applicable ISIR • Current school must pay on verified transaction

Death of applicant

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Verification - Exclusions Not required to verify FAFSA information for

parents of dependent student or spouse of independent student if parents/spouse

• Reside outside U.S. and cannot be contacted by normal means of communication

• Cannot be located because contact information is unknown and cannot be obtained

• Mentally incapacitated• Deceased (spouse)

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Verification – Marital Status

• Updating Marital Status:- MAY require student to update FAFSA if

change in marital status necessary to address an inequity or reflect more accurately ability to pay• FAFSA needs to reflect accurate

household size, number in college, dependency status and family financial information

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Acceptable Documentation 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

Tax returns submitted with preparer signature (wet, stamped, typed or printed) with the name and address of the preparer must also have their SSN, EIN, or PTIN

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Verification & Interim Disbursements

Interim disbursements may be made without receipt of corrected ISIR if completed verification does not change aid eligibility • However all required corrections must be

submitted to CPS and school must receive revised ISIR transaction

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Verification & Increasing Pell Eligibility

• No longer limits student to lesser Pell award if verification completed after enrollment- Student would receive Pell payment based

upon correct EFC

• Must have valid ISIR to support disbursements

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Information to be Verified

Beginning with 2012-13, ED will publish aFederal Register Notice prior to beginning ofeach award year’s FAFSA processing listingpossible verifiable items and acceptabledocumentation• SAR/ISIR will specify required

verification items for applicant

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Verification Dear Colleague Letter DCL GEN-11-13

• Federal Register published July 13, 2011 details FAFSA information to be verified for AY 2012-13

• Summarizes the verification process for the 2012-13 award year

Citations: 34 CFR §§ 668.51 through 668.61

2012-13 Verification ItemsAll Applicants

Number in Household

Not required if: Dependent student household size reported is

two and the parent is unmarried or three if the parent is married

Independent student household reported is one and the applicant is unmarried or two if the applicant is married

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2012-13 Verification ItemsAll Applicants -

Number in College

Not required if reported is one

Provide name and age of each household member who is or will be attending an eligible postsecondary educational institution as at least a half-time student in the 2012-2013 award year and the name of the eligible institution(s) that each household member is or will be attending

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2012-13 Verification ItemsAll Applicants

Food Stamps, if receipt reported on FAFSA

Documentation from the agency that issues Food Stamps benefit or alternative documentation as determined by the institution to be sufficient to confirm that the applicant received Food Stamps in 2010 or 2011

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2012-13 Verification ItemsAll Applicants –

Child support paid if amount reported on FAFSA

Statement signed by the applicant, spouse, or parent who paid the child support certifying:• Amount of child support paid• Name of the person to whom child support

was paid• The name of the children for whom child

support was paid

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2012-13 Verification Items

Tax Filers- From IRS Data Retrieval

Adjusted Gross Income (AGI) Taxes paid Specific untaxed income items from tax return -• Untaxed IRA distributions• Untaxed pensions• Education credits• IRA deductions• Tax exempt interest

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2012-13 Verification ItemsNontax Filers

Copy of IRS Form W-2 for each source of employment income received for tax year 2011

A signed statement certifying:• That the individual has not filed and is not

required to file an income tax return for tax year 2011 • The sources of income earned from work as

reported on the FAFSA and amounts of income from each source for tax year 2011 that is not on W-2s

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2012-13 Documentation Comprehensive list in July 13, 2011 Federal

Register notice

• IRS Data Retrieval Process

• IRS TranscriptRequest On-Line at IRS website: www.irs.govIRS Toll free number: (800)908-9946Obtain form 4506T-EZ online and mail to IRS: http://www.irs.gov/pub/irs-pdf/f4506tez.pdf

• IRS Tax Return: Limited conditions

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http://www.irs.gov/

http://www.irs.gov/pub/irs-pdf/f4506tez.pdf

IRS Data and Verification

For 2011-12 An institution may consider IRS retrieved

information as acceptable verification documentation if • The Secretary has identified those items

as having come from the IRS and have not been changed IRS Request Flag = 02

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IRS Data Retrieval

CPS will set flags and comment codes to indicate that the student and/or parent transferred IRS data into FOTW

Comment codes will appear in:• FAA Information section of the ISIR• Student Inquiry section of FAA Access

Flags and codes set based on certain conditions

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IRS Request Flag ValuesIRS Request Flag on ISIR will begin to be populated

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00 Student/ Parent was ineligible to use the IRS Data Retrieval Tool and was therefore not presented with the option to use it in FAFSA on the Web

01 Student/ Parent was presented with the option to use the IRS Data Retrieval Tool in FAFSA on the Web and elected to use it, but did not transfer IRS data into the FAFSA

02 IRS data for the student/ parent was transferred from the IRS and was not changed by the user prior to submission of an application or correction

03 IRS data for the student/ parent was transferred from the IRS and changed by the user prior to submission of an application or correction

04 IRS data for the student/ parent was transferred from the IRS and then changed by the user on a subsequent transaction

05 Student/ parent was presented with the option to use the IRS Data Retrieval Tool in FAFSA on the Web, but did not elect to use it

06 IRS data for the student/ parent was transferred from the IRS, but a subsequent change made the student/ parent ineligible to use the IRS Data Retrieval Tool

blank IRS Data Retrieval Tool not available in the application method utilized by the student/ parent(i.e., paper FAFSA, EDE, or FAA Access)

IRS Data Retrieval Tool2012-2013 FAFSA on the Web will include logic to make the determination for the applicant.

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IRS Tax Return Transcript Required

• A tax transcript is required when:– the IRS Data Retrieval Process was not used– the IRS Data Retrieval Process was used, but

data was subsequently changed– a married independent applicant and spouse

filed separate tax returns. – the parents of a dependent student filed

separate tax returns.

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IRS Tax Return Transcript Required

• A tax transcript is also required when:– an applicant or applicant’s parent had a

change in marital status after the end of the tax year on December 31, 2011.

– the applicant, or parent or spouse, as applicable, filed an amended tax return.

• Signature of tax filer on IRS Tax Return Transcripts does not have to be signed by the tax filer (but is a good practice)

Verification

Using the IRS Data Retrieval Process is the fastest, easiest, and most secure way to meet verification requirementsMay be done at either of two points:*initially FOTW filing*when using FOTW corrections

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Ordering an IRS Account Transcript—Three Methods

Online •IRS website•www.irs.gov

Phone •Toll free IRS number•1-800-908-9946

Paper •Obtain form online and mail to the IRS•http://www.irs.gov/pub/irs-pdf/f4506tez.pdf

IRS WEBSITEOrdering an IRS Account Transcript—Method One:

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Ordering an IRS Account Transcript

Heightened Cash Monitoring 2

(HCM2)/Reimbursement

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Heightened Cash Monitoring 1 (HCM1)

Advanced Payment

Ordering an IRS Account Transcript online (Steps 1-3)

Step 1: Click

Order a Tax

Return or

Account Transcri

pt

Step 2 :

Click Order

a Transcript

Step 3: Enter

the tax filer’s

information:

•SSN•DOB•Address

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Ordering an IRS Account Transcript online (Steps 4-6)

Step 4:

Click Continue

Step 5: Select Return Transcript under the Type

of Transcript field

Step 6: Select

the appropriate year

in the Tax Year

filed (e.g., 2011)

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TELEPHONEOrdering an IRS Account Transcript—Method Two:

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Ordering an IRS Account Transcript by TelephoneStep

1:Call the IRS at 800-908-9946

Step 2: Follow prompt

s to enter SSN

and the number

s in their street

address

Step 3:

Select “Option 2”

to request a Tax Return Transc

ript

Step 4:

Enter the appropriate year

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Ordering an IRS Account Transcript by Telephone

Confirmation will be given when the process

is completed

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PAPER FORMOrdering an IRS Account Transcript—Method Three:

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Ordering an IRS Account Transcript by Paper Form

Step 1:Downloa

d Form

4506T-EZ at

www.irs.gov/pub/irs

-pdf/ f4506tez.

pdf

Step 2: Complete lines

1-4 using

instructions

from p. 2 of the

form

Step 3: Line 5 allows

for direct

mailing of the

transcript to a

3rd party

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Ordering an IRS Account Transcript by Paper FormStep 4: On line 6, enter

the appropriate tax

year (e.g.,

2011 for the 12-

13 FAFSA)

Step 5: The tax filer must sign &

date the form and enter a

telephone #. (Only

one signature is required to request a transcript for a joint return.)

Step 6: Mail/fax

the completed form to

the address/FAX # on page 2 of the form

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Ordering an IRS Account Transcript by Paper

• Processing form 4506T-EZ means validating the information provided on the form.

• If any information does not match the IRS records, the IRS will notify the tax filer that it was not able to provide the transcript.

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Things to Know about theIRS Account Transcript• Tax filers can

expect to receive a paper IRS Tax Return Transcript within 5 -10 days of successful validation

• IRS Tax Return Transcripts requested online cannot be sent to a 3rd party if processed by web or phone order

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Tax Transcript Sample (Part 1)

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Ta x a n d C r e d i t s ( c o n t . )


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Ordering an IRS Account Transcript

Heightened Cash Monitoring 2

(HCM2)/Reimbursement

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Heightened Cash Monitoring 1 (HCM1)

Advanced Payment

Customized Verification(2013-2014)

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Verification Selection• Current process• In 2011-12 and 2012-13, verification selection

occurs when FAFSA is submitted for processing • Central Processing System (CPS) applies risk

model to FAFSA dataIf applicant, or parent of applicant, meets pre-determined risk criteria based on information provided on the FAFSA, CPS selects record to be verified by the school

• Applicants generally not re-subjected to CPS risk model when making FAFSA corrections

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Verification Selection• ISIR indicates in the Verification Flag field

whether applicant has been selected–Y = Selected for verificationN = Not selected for verification* = Selected on a subsequent transaction

• Federal Student Aid Handbook and Federal Register Notice – Provide written guidance on specific items to be

verified for tax filers and non-tax filers – Describe acceptable documentation

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Future Verification• In the future, the ISIR will indicate –

– Whether an applicant has been selected for verification, and

– Specific item or items that must be verified

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2013-14 Customized Verification

• Like current process, applicant data will be subjected to risk model on 01 transaction

• Three categories of selection –• Targeted selection -- data meets a risk criteria

and record is selected for “targeted” verification• Discretionary selection – data does not meet risk

criteria for targeted selection, but is selected to verify a non-targeted data element

• Combination of targeted and discretionary selection

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Targeted Selection• Using 2012-13 FAFSA data elements to be

verified as an example, if applicant is selected for targeted verification, he/she would verify -– Tax filers

• AGI*• Taxes Paid• Untaxed Income reported on Tax Returns

– Untaxed IRA Distributions– Untaxed Pensions– Education Credits – IRA Deductions– Tax Exempt Interest

• Family Members*• Number in College*

* If eligible for Automatic Zero EFC

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Targeted Selection

– Non-tax filers• Earned Income• Family Members• Number in College

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Discretionary Selection• If not selected for targeted verification, may be

selected to verify discretionary data reported on the FAFSA

• Using 2012-13 as an example, data elements would include –– Food stamps– Child Support Paid

• In 2013-14 and beyond, would probably not select all applicants who reported these items on their FAFSA (i.e., would use “n” value, at least initially)

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Targeted and Discretionary• Combination of targeted and discretionary

verification selection– Applicant met a targeted risk criteria

PLUS

– Was selected to verify one or more discretionary data elements from the FAFSA

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The 2013-14 ISIR• The Institutional Student Information Record

(ISIR) would include –– Verification Flag (Y, N, *)– Fields for all FAFSA data elements subject to

verification for a given year (per FR Notice)– Verification codes for each of those data

elements indicating verification selection statusY = Data element selected for verificationN = Data element not selected for

verificationV = Data element selected for verification,

but student transferred data using the IRS data retrieval tool and did not

change it64

The 2013-14 ISIR• The data elements selected for verification

would be based on –– Applicant’s dependency status– Whether applicant was selected for targeted

verification, discretionary verification, or both– Whether applicant is a tax filer or non-tax

filer– Whether applicant is eligible for Auto Zero

EFC or not– Whether applicant must verify HHS and # in

college

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2013-14 Student Aid Report (SAR)

• The SAR will tell students that they were selected, but will not indicate the specific fields that need to be verified

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Example 1Dependent student, targeted selection, parent and student both tax

filers, not eligible for Auto 0 EFC, did not use IRS Data Retrieval

FAFSA Data Element Verification Indicator

Parent AGI Y

Parent Taxes Paid Y

Parent Untaxed Income (5 elements) Y

Parent Income Earned from Work N

Parent Household Size Y

Parent Number in College Y

Parent Food Stamps Received N

Parent Child Support Paid N

Student AGI Y

Student Taxes Paid Y

Student Untaxed Income (5 elements) Y

Student Income Earned from Work N

Student Household Size N

Student Number in College N

Student Food Stamps Received N

Student Child Support Paid N

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Example 2Dependent student, parent and student filed a tax return, eligible for

Auto Zero EFC, used IRS Data Retrieval ToolFAFSA Data Element Verification Indicator

Parent AGI V

Parent Taxes Paid N

Parent Untaxed Income (5 elements) N


Parent Household Size Y

Parent Number in College Y

Parent Food Stamps Received N


Student AGI N

Student Taxes Paid N

Student Untaxed Income (5 elements) N






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Example 3Dependent student, parent received food stamps, selected to verify a

discretionary item only

FAFSA Data Element Verification Indicator

Parent AGI N

Parent Taxes Paid N

Parent Untaxed Income (5 elements) N


Parent Household Size N

Parent Number in College N

Parent Food Stamps Received Y


Student AGI N

Student Taxes Paid N

Student Untaxed Income (5 elements) N






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New Verification Regulations

Part of program integrity package

• Notice of proposed rulemaking: June 18, 2010– http://edocket.access.gpo.gov/2010/pdf/2010-141

07.pdf

• Final regulations: October 29, 2010– http://edocket.access.gpo.gov/2010/pdf/2010-265

31.pdf

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http://edocket.access.gpo.gov/2010/pdf/2010-14107.pdf




• Effective date for verification: July 1, 2012

• Technical corrections: April 14, 2011

• Dear Colleague letters– GEN-11-03, February 2011– GEN-11-13, July 2011

• Federal Register Notice: July 13, 2011

New Verification Regulations (cont’d)

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Contact Information Nautochia Webb

[email protected]

646-428-3758

Sandy Santana

[email protected]

646-428-3754

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mailto:[email protected]

mailto:[email protected]

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