FAFSA and IRS Data Retrieval Tool (DRT) Collapses

By Edvisors Network April 12, 2017

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Question: My parents tried to use the Internal Revenue Service Data Retrieval Tool (IRS DRT) to transfer income and tax information from their 2015 federal income tax return to my 2017-18 FAFSA. However, the FAFSA website indicated that they were not able to use the IRS DRT. What’s up? (Ross T. Atlanta, GA)

You may have heard that on Friday, March 3, FAFSA's IRS Data Retrieval Tool (DRT) unexpectedly went offline and hasn't been functional since. Any students completing the 2016-17 or 2017-18 FAFSA have been unable to retrieve their and their families' IRS data. According to the IRS and the U.S. Department of Education, the tool has been taken offline due to general concerns regarding data security and will be down until at least the Fall of 2017. The IRS announced that the inability to use the tool also affects those who are applying for income-driven loan repayment plans.

We’ve been receiving a lot of questions from students and parents who’ve been impacted by this unexpected event. What does this suspended IRS DRT-FAFSA process mean for students and families?

The data retrieval tool was introduced in the 2009-10 academic year and allowed students to finish the FAFSA sooner and avoid errors. Students who are unable to electronically transfer their data from the IRS to the FAFSA using the IRS DRT are now more likely to have their FAFSA selected for a process called verification, which requires colleges to compare information on the FAFSA to a federal tax return. Students without access to a copy of their 2015 federal tax records will need an official tax transcript from the IRS.

The IRS DRT reduced the number of students selected for verification, which is an often cumbersome process that can delay a financial aid award package, affecting the student’s ability to make an informed decision about where to enroll. This inability to use this IRS tool also reversed the momentum of Early FAFSA and the switch to using prior-prior year income, which represented a big advantage because using older, already completed taxes was supposed to increase the percentage of students able to use the DRT.

March-April is peak season for continuing students filing their FAFSA renewals. A surge of renewal FAFSA filers flagged for verification is expected to increase the burden on financial aid administrators.

Here are some suggestions of ways students and families can be helped during this FAFSA-IRS DRT interruption:

1. Be assured that the FAFSA is still available online and you do not have to wait for the return of the IRS DRT. It is important to do the FAFSA now and not wait for the return of the IRS DRT, which is estimated not to be available until Fall of 2017

2. You and your parents (if you are a dependent student) will need copies of all of your 2015 Federal income tax return paperwork. You can retrieve this paperwork from your tax preparer or your tax software if you don't have a copy. Those with no access to a copy should request a tax transcript.

3. If you need to retrieve a tax transcript (a free IRS document) to complete and submit you FAFSA, a transcript can take up to 10 days to receive in the mail.

4. After your FAFSA is filed, you should request an Official IRS tax return transcript using a Form 4506-T in preparation for verification of your financial information. For verification purposes, the only documentation allowed in lieu of IRS Data Retrieval with unchanged data is an IRS Tax Return Transcript, not a Tax Account Transcript, unless there is an allowed special circumstance.

*You and your parents can get an IRS tax return transcript online if you are able to confirm your identities. In order to confirm identity, an independent student or the parent of a dependent student will need:

· First Name

· Last Name

· Tax filing address (must match exactly, for example, ST vs. Street)

· Social Security Number

· Tax filing status

· One of the following: credit card, mortgage number, home equity loan number or auto loan number

· Mobile phone number with account in his/her name

· Email address

To request transcripts online, go to IRS.gov and use the Order a Transcript tool. To order by phone, call 800-908-9946 and follow the prompts.

For more information on using the IRS DRT for completing a FAFSA, check out this article from the IRS.