Office of Postsecondary Education - U.S. Department of Education

WReier-Aviles on DSKGBLS3C1PROD with RULES266910 Federal Register / Vol. 75, No. 209 / Friday, October 29, 2010 / Rules and Regulationsexpected to have a basic understandingof relevant tax issues that canconsiderably affect an applicant’seligibility. We expect FAAs to be able toascertain whether an applicant or his orher family members identified on theapplicant’s FAFSA were required to filea tax return, what the correct filingstatus for the applicant should be, andthat an individual cannot be claimed asan exemption by more than one person.Changes: None.Comment: One commenter asked forclarification on whether institutionshave the authority to require anindividual who is required to file a U.S.tax return but who has been granted afiling extension by the IRS to submit taxdocuments before proceeding withverification. Another commenter askedwhy the Department would not requirethe actual tax return filed with the IRSto be used to complete verification fora student or parent that files a taxextension. This commenter stated that astudent should not receive any aid untilverification is completed using theactual tax return (not the documentationprovided under § 668.57(a)(4)(ii)).Another commenter supported therequirement that an applicant who isgranted an extension to file his or herincome tax return must submit a copyof the return that was filed, and theinstitution must re-verify the AGI andtaxes paid by the applicant and his orher spouse or parents.Discussion: Section 668.57(a)(4)(ii)(A)provides that an institution must accepta copy of IRS Form 4868, ‘‘Applicationfor Automatic Extension of Time to FileU.S. Individual Income Tax Return,’’that was filed with the IRS or a copy ofthe IRS’s approval for an extensionbeyond the automatic six-monthextension as acceptable documentationto verify an applicant’s FAFSAinformation for an applicant that hasbeen granted a tax filing extension. Aninstitution may request a copy of the taxreturn once filed, but it may not delayverifying an applicant’s FAFSAinformation until the tax return isreceived if the applicant provides thedocumentation approved by theSecretary under § 668.57.The Department does not require anapplicant that has been granted a taxextension to submit the actual tax returnfiled with the IRS because of theextended period of time that may elapsebefore the applicant actually files thereturn. This would delay the applicant’said, which we believe would beinappropriate. We believe the incomeinformation collected on IRS Form 4868and IRS Form W–2 should be sufficientdocumentation to verify the AGI,income earned from work, or U.S. taxespaid if those items are selected forverification. However, the regulationsdo provide that the institution mayrequire the applicant to submit theactual tax return that was filed with theIRS. If the institution receives a copy ofthe return, it must reverify the AGI andtaxes paid by the applicant and his orher spouse or parents.We believe clarification is needed forthe one commenter who appeared tointerpret § 668.57(a)(5) to mean that inall cases applicants who are granted atax extension must submit the actual taxreturn once it is filed, and that theinstitution must reverify the AGI andtaxes paid by the applicant and his orher spouse or parents once it receivesthe filed return. An applicant who filesan extension is only required to providea copy of the tax return that was filedif the institution requires a copy. Onlyif the institution requires the applicantto submit the tax return that was filedwould the institution be required toreverify the AGI and taxes paid by theapplicant and his or her spouse orparents. This differs from what occursunder the current regulations. Under thecurrent regulations, if an institutionrequired an applicant who was granteda tax filing extension to submit thereturn to the institution once it wasfiled, the institution could decidewhether or not to reverify the AGI andtaxes paid by the applicant and his orher spouse or parents.Changes: None.Comment: None.Discussion: We are making a technicalchange to § 668.57(a)(4)(iii)(B) to clarifythat an individual who is self-employedor who has filed an income tax returnwith a foreign government must providea signed statement that certifies theamount of taxes paid in addition to hisor her AGI.Changes: Section 668.57(a)(4)(iii)(B)has been revised to provide that aninstitution must accept a writtencertification of the amount of taxes paidfor an individual who is self-employedor has filed an income tax return witha foreign government.Comment: One commenter soughtclarification on § 668.57(a)(7), whichprovides that an institution may acceptin lieu of a copy of an income tax returnsigned by the filer of the return or oneof the filers of a joint return, a copy ofthe filer’s return that includes thepreparer’s Social Security Number,Employer Identification Number or thePreparer Tax Identification Number andhas been signed by the preparer of thereturn or stamped with the name andaddress of the preparer of the return.The commenter asked whether it wouldbe acceptable for the preparer to writeVerDate Mar2010 14:10 Oct 28, 2010 Jkt 223001 PO 00000 Frm 00080 Fmt 4701 Sfmt 4700 E:\FR\FM\29OCR2.SGM 29OCR2or type his or her name on a filer’s taxreturn. The commenter noted thatguidance in the 2010–11 Applicationand Verification Guide is much broader,as it allows the preparer to stamp, type,sign, or print his or her name on a filer’stax return.Discussion: We agree with thecommenter and have revised§ 668.57(a)(7) to expand the options atax preparer has for being identified onan applicant’s tax return to make itconsistent with the guidance providedin the 2010–11 Application andVerification Guide.Changes: We have revised§ 668.57(a)(7) to provide that in additionto having the preparer’s signature orstamp on a filer’s tax return, theinstitution may accept a paper return onwhich the tax preparer has typed orprinted his or her own name.Interim Disbursements (§ 668.58(a)(3))Comment: Some commenterssupported § 668.58(a)(3), which allowsan institution to make an interimdisbursement prior to receiving thereprocessed SAR or ISIR if, afterverification, the institution determinesthat changes to the applicant’sinformation will not change the amountthe applicant would receive under atitle IV, HEA program and therequirement in § 668.59(a) that requiresinstitutions to submit all corrections tothe Department for reprocessing. Onecommenter did not support allowing aninstitution to disburse aid to a studentbefore the student’s corrected FAFSAinformation has been submitted and theinstitution receives a reprocessed SARor ISIR.Discussion: The Departmentappreciates the commenters’ supportand notes that interim disbursementsare optional, not required.Changes: None.Comment: One commenter stated thatbecause all corrections must besubmitted to the Department under§ 668.59(a), there is no need to allowinterim disbursements. This commenterrecommended that we remove from theregulations all provisions related tointerim disbursements.Discussion: We believe it is importantto continue to give institutions theflexibility to determine whether to makeinterim disbursements to individualapplicants prior to the completion ofverification to alleviate a hardship astudent may experience if there is adelay in receiving his or her financialaid. And, as noted earlier, interimdisbursements are optional, notrequired.Changes: None.