This AskRegs Knowledgebase Q&A has been updated to include the number of business days that must pass before you accept a signed statement in place of a verification of nonfiling when IRS Form 4506-T is used to request a verification of nonfiling. This guidance is new with the publication of the 2020-21 Application and Verification Guide volume of the FSA Handbook.
Yes, but first see AskRegs Q&A, Is a Verification of Nonfiling Letter Required to Complete Verification?
Note that a Verification of Nonfiling Letter is not available for request using the IRS toll-free phone number or the online Get Transcript By Mail service. The nonfiling letter can only be requested using the Get Transcript Online service or by mailing the 4506-T form to the IRS.
The verification or confirmation of nonfiling from the IRS or other relevant tax authority still is a verification requirement for nontax filers (except the dependent student) for the 2019-20, 2020-21, and 2021-22 award years. However, there are alternatives depending on which of the following categories the individual falls into:
Individuals Who Attempt but Fail to Obtain a Verification of Nonfiling Letter from the IRS or Other Relevant Tax Authority
If the parent, independent student, or spouse attempts but is unable to obtain the verification or confirmation of nonfiling from the IRS or other relevant tax authority, and the school has no reason to question the individual’s good-faith effort to obtain the required documentation, the school may accept as a replacement for verification/confirmation of nonfiling:
1) A signed statement certifying that the individual:
2) A copy of IRS Form W-2, or an equivalent document, for each source of employment income received by the individual for the tax year being verified.
In relation to the W-2, the July 9, 2020 Electronic Announcement adds this guidance: "During this period of national emergency, the Department is permitting institutions to accept a copy of a paystub, an employment offer letter, evidence of direct deposit from an employer, or other similar information for verification purposes. In the case of foster care youth, given the unlikelihood that such students would have earned enough to require them to file taxes, we will permit the institution to accept a signed statement from the foster care youth that he or she earned less than the amount that triggers the requirement for taxpayers to file tax returns." The announcement appears to also apply this W-2 exception to unaccompanied homeless youth; NASFAA has asked ED to confirm this point.
Whether or not the individual made a good-faith effort to obtain the verification or confirmation of nonfiling is a determination that is made by the school. Since this is a flexibility that is specifically left to the school, neither ED nor NASFAA will define this for the school.
Update For 2020-21 and Beyond: If IRS Form 4506-T is used to request a verification of nonfiling from the IRS, the school must wait at least 10 business days before accepting the signed statement and W-2s noted above. Since the verification of nonfiling must be dated on or after October 1, 2019 for 2020-21 award year verification (or October 1, 2018 for 2019-20 or October 1, 2020 for 2021-22), you cannot accept a signed statement before that date.
Reference also the January 9, 2019 Electronic Announcement, May 24, 2019 Federal Register, and July 9, 2020 Electronic Announcement.
Verification of Nonfiling Alternative Provided By the IRS
In some cases, an individual will receive a verification or confirmation of nonfiling alternative, even after requesting one from the IRS. This is okay. Any IRS document is acceptable as verification of nonfiling (VONF) if it is dated on or after October 1, 2019 for the 2020-21 award year (or October 1, 2018 for 2019-20 or October 1, 2020 for 2021-22) and clearly indicates that the IRS does not have a tax return record from the individual for the tax year being verified. Such documents can include, but are not limited to:
There are different versions of IRS Form 13873, including the:
Any version of IRS Form 13873 is acceptable, as long as it contains a clear indication that it is provided as a verification of nonfiling or that the IRS has no record of a tax return for the tax year. If the individual did not properly or accurately complete his request for an IRS Verification of Nonfiling Letter or other IRS document, Form 13873 may be used by the IRS to communicate this to the individual. Such a communication is not acceptable for verification if it does not clearly indicate the IRS has no tax return on file. Such individuals should re-request the IRS Verification of Nonfiling Letter by properly following IRS document request procedures (for example, a properly completed 4506-T).
There are instances when a tax transcript or other IRS document contains a message indicating the request “could not be processed” or the “request could not be honored.” Such documents are not acceptable as verification of nonfiling; instead, the individual should follow IRS instructions for re-requesting the IRS Verification of Nonfiling Letter or for obtaining further documentation clearly indicating there is no tax return on file for the individual for the tax year.
Individuals Who Cannot Request a Verification of Nonfiling Letter from the IRS (e.g., Undocumented Individuals)
When a parent of a dependent student or the spouse of an independent student living in the U.S. does not have a Social Security Number (SSN), an Individual Taxpayer Identification Number (ITIN), or an Employer Identification Number (EIN), he is unable to obtain a Verification of Nonfiling Letter from the IRS. If their income is below the IRS filing threshold, these individuals do not need a verification of nonfiling letter and instead must submit to the institution:
1) A signed and dated statement:
2) If applicable, a copy of the W–2 for each source of employment income received for the tax year, or an equivalent document.
If the undocumented individual's income is above the IRS filing threshold, that individual must file a tax return. See AskRegs Q&A, How Do We Complete Verification for an Undocumented Individual Who Did Not But Is Required to File a Tax Return?
Residents of Foreign Countries
If the individual lives in a foreign country that does not provide a Verification of Nonfiling Letter or confirmation of nonfiling from the relevant tax authority, or if the individual is unable to obtain the documentation, the individual may provide a signed and dated statement indicating either that the taxing authority does not provide such documentation, or that the individual was unable to obtain the documentation after contacting the taxing authority. This statement can be combined with the required signed and dated statement or verification worksheet certifying:
In addition to the signed statement, a resident of a foreign country could, but is not required to, also provide proof of that taxing authority’s filing requirements. This might involve obtaining something directly from the taxing authority or providing information that may be available on the taxing authority's website. While ED’s guidance does not specifically address instances when the foreign country does not have a taxing authority, it would be consistent with ED’s guidance to document that the foreign country does not have a taxing authority. As such, the individual may provide either a website confirmation or a signed and dated statement indicating the country does not have a taxing authority.
Note: This AskRegs Q&A was previously updated to include a note about W-2 alternatives provided in the July 9, 2020 Electronic Announcement.
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