Implementation of the TRA '97 information reporting provisions.

• Author: Mackay, Jim
• Position: Taxpayer Relief Act of 1997

The Taxpayer Relief Act of 1997 (TRA '97) is reputed to have included more information reporting provisions than all of the tax legislation enacted in the past decade combined. Most of these provisions became effective on Jan. 1, 1998, and therefore, win be reflected on 1998 information returns issued and filed in 1999. The IRS has provided guidance implementing many of these new provisions.

Payments of Qualified Tuition and Related Expenses Received by Colleges and Universities

The TRA '97 created an income tax credit allowable to certain taxpayers who pay qualified tuition and related expenses to an eligible educational institution. The TRA '97 also enacted Sec. 6050S, which requires eligible educational institutions that receive payments of qualified tuition and related expenses, or make reimbursements or refunds of such amounts, to file an information return with the Service for each student on whose behalf such payments are made.

In Notice 97-73, the IRS announced that Form 1098-T, Tuition Payments Statement, will be used for purposes of reporting tuition payments received. For 1998, institutions will be required to report on Form 1098-T the name, address and taxpayer identification number (TIN) of both the eligible educational institution that received the payments and the student for whom payments of qualified tuition and related expenses were received during 1998; an indication as to whether the student was enrolled for at least half the full-time academic workload during any academic period commencing in 1998; and an indication of whether the student was enrolled in a graduate-level program. In future years, institutions will also be required to report the aggregate amount of payments of qualified tuition and related expenses received by the institution with respect to the student.

Interest Received on Qualified Education Loans

Another provision in the TRA '97 allows certain taxpayers to claim a deduction for interest paid on qualified education loans. A qualified education loan is a loan used to pay the costs of attendance at an eligible educational institution. In addition to the information reporting requirement described, new Sec. 6050S also requires information reporting by any person engaged in a trade or business who, in the course of that trade or business, receives from an individual interest aggregating $600 or more for any post-1997 calendar year on one or more qualified education loans.

In Notice 98-7, the Service...