Published on Mar 9, 2016
Dear International Student,
We would like to provide you with an update on the issues surrounding the 2014 tax returns as many students are experiencing delays in the processing of tax returns for nonresident students and may have received IRS notices (5532C, CP21C, CP22A) or been denied refunds or benefits from 1040NR or 1040NR-EZ submissions for 2014.
To summarize what follows in more extensive detail:
- There is an IRS data matching problem caused by enactment of a recent law, FATCA
- The IRS will not allow UChicago to act on behalf of individual students in this matter
- NACUBO* is working with the IRS to resolve this problem
- Depending on the communications you have received to date, there are steps you must take immediately
- This will not have an impact on any student’s immigration status
*NACUBO=the National Association of College and University Business Officers, which represents university payroll offices
What We Know
The Foreign Account Tax Compliance ACT (FATCA), which became law in March 2010, went through a transition year in 2014. FATCA’s objective is proper reporting of foreign financial assets which do not affect most higher education activities. However, FATCA information is reported on IRS form 1042S - a form that does have great bearing on activities in higher education.
For 2014 tax returns, the IRS has stated that a newly instituted data matching process has applied whenever a Form 1042-S is involved, due to FATCA requirements. That process involves verifying that the data on the recipient copy of the form matches up in all respects with the data provided to the IRS by the withholding agent (University of Chicago). The IRS intentionally delayed processing tax returns associated with Forms 1042-S until this new matching program was in place, which explains why they are only now beginning to process some 2014 tax returns and students previously received letters from the IRS indicating a delay in processing.
The IRS indicated that the new system requires specific matches between 1042-S recipient copies and 1042-S data provided to the IRS by the withholding agent. In some cases, the new system is reading a mismatch of data between the electronic submission the University of Chicago transmitted to the IRS and the information provided on the recipient 1042-S, which is resulting in the generation of IRS Notices 5532C, CP21C and CP22A.
IRS Response
On March 3, 2016, the IRS participated in a call with various higher education institutions along with the National Association of College and University Business Officers, which represents offices such as the University’s Payroll Office, and nonresident vendors/attorneys. The IRS acknowledged that they need to review their procedures pertaining to the 1042-S form and electronic submission; they also agreed to review sample cases from the institutions on the call for a more thorough review. Unfortunately, the IRS did not provide a timeline for answers or a resolution.
The IRS deems this an individual tax matter, so they will not speak to the University of Chicago on behalf of any of our students. This highlights the importance of students responding to the IRS notices themselves, either by phone or US Post.
University of Chicago Response
While we cannot advocate for our students on an individual basis with the IRS, the University of Chicago is committed to supporting our students and effecting change on this issue in as many ways as possible. The University was one of the first institutions to bring attention to this issue on a national level (through our foreign tax vendor/attorney and NACUBO) and we are continuing to monitor this issue on a daily basis.
We have also learned that the IRS Taxpayer Advocate Service (TAS) is aware of the issue and has assigned a project team within TAS to study the issue and work with the IRS. TAS has assured us that this is being treated as a high priority.
Unfortunately, the IRS has provided conflicting guidance to institutions on this issue, and institutions continue to discuss amongst each other what the best course of action seems to be.
To avoid providing inaccurate or ineffective information, the University of Chicago has concluded that the email and memo sent on 2/25/16 was the best course of action at the time. As of 3/9/2016, the IRS as a whole has not provided clear, precise information on how they are handling this issue, nor how the withholding agent or taxpayer should proceed. We have again reviewed all the advice provided and believe the course of action below is best at this time based on the communication you received from the IRS.
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Students who have not received a 2014 tax refund due, but have NOT received IRS Notices – 5532C, CP21C or CP22A
- If you have moved since your 2014 tax return submission, you must update your address with the IRS to begin receiving notices regarding your account. Click here for information on updating your address with the IRS.
- Send a letter to the IRS. The letter should be sent to the IRS requesting the status of the foreign national’s income tax refund. The letter should be sent to Department of Treasury Internal Revenue Service Austin, Texas 73301-0215. The letter should include your SSN or ITIN and you should attach a copy of the originally filed income tax return clearly marked “COPY”. The letter should be sent certified return receipt requested to substantiate mailing to the IRS. Please scroll down for a sample letter.
- Make and retain a copy of any of the above communication for your records.
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Students who have not received a 2014 tax refund due, but HAVE received IRS Notices – 5532C, CP21C or CP22A
- Respond immediately in writing to that letter, sending correspondence by certified mail, return receipt requested. Please scroll down for a sample letter. You will need to include a copy of the letter you received from the IRS.
- Your response letter must be sent to the address as shown on the IRS Notice you received; if you received multiple notices with different addresses, send the information to the address that indicates a balance due. If you have not received a notice with a balance due, then send the above response to the address indicated on the IRS notice you did receive.
- Students should also try to reach IRS via telephone and request that temporary holds be put on their accounts while this issue is being investigated by the withholding agent that issued their 1042-S and IRS.
- Make and retain a copy of any of the above communication for your records.
At this time, we do not believe you need to send additional documents such as a copy of your 2014 1040NR or 1040NR-EZ or a copy of your 2014 1042-S.
This is an extremely unfortunate situation and we know that it is affecting many of you. We are aware of the hardship, stress and frustration this is causing, and we continue to do everything possible to get it resolved. We will follow up with any new information that becomes available. For questions regarding IRS matters that the information above may not have resolved for you, please contact Angie Gleghorn at gleghorn@uchicago.edu.
It may help to know that these tax matters will not have any impact on your lawful presence in the US and do not affect your F or J international student status in any way. Should you have concerns regarding your status in connection with your IRS situation, please contact Tamara Felden at tfelden@uchicago.edu.
With best regards,
Tamara
Sample letter for students who have not received a 2014 tax refund due, but have NOT received IRS Notices – 5532C, CP21C or CP22A
<Student Name>
<Student Address>
<Date>
Department of Treasury
Internal Revenue Service
Austin, Texas 73301-0215
Taxpayer: <Name of Student>
SSN/ITIN: <SSN/ITIN>
IRS Form: 1040NR or 1040NR-EZ (only indicate the form you submitted)
Tax Period: Calendar Year 2014
To Whom It May Concern:
I am contacting you regarding my 2014 tax return. I have not yet received the refund that is due to me and I am requesting a status update on my 2014 income tax refund.
I am dissatisfied with the processing time for my 2014 income tax refund and am requesting that my record be reviewed without delay. I have included a copy of my 2014 tax return documents to facilitate a timely review.
Any further written communication regarding this matter can be sent to me at the address above. I can also be contacted by phone at <phone number>.
Thank you for your assistance.
Sincerely,
<Student Name>
Enclosure
Sample letter for students who have not received a 2014 tax refund due, but HAVE received IRS Notices – 5532C, CP21C or CP22A
<Student Name>
<Student Address>
<Date>
Department of Treasury
Internal Revenue Service
<IRS address listed on notice>
Taxpayer: <Name of Student>
SSN/ITIN: <SSN/ITIN>
IRS Form: 1040NR or 1040NR-EZ (only indicate the form you submitted)
Tax Period: Calendar Year 2014
To Whom It May Concern:
I am contacting you regarding my 2014 tax return. I have received the following notice(s) <notice number you received; either LTR5532C, CP22A and/or CP21C>. I disagree with the proposed adjustment indicated on the notice.
The withholding agent (The University of Chicago) of my 2014 1042-S form indicated that the information provided on the form is correct and the proper information was transmitted to the IRS in March 2015. I have included a memo from The University of Chicago stating this information. As this is a widespread issue, I request that a hold be placed on my account until this is resolved by the IRS and the refund due to me is processed.
Any further written communication regarding this matter can be sent to me at the address above. I can also be contacted by phone at <phone number>.
Thank you for your assistance.
Sincerely,
<Student Name>
Enclosure