Please see the following for the latest update from the IRS.
Thousands of international students and scholars at U.S. colleges and universities are being denied withholding credits or assessed tax bills by the Internal Revenue Service, according to the National Association of College and University Business Officers. The students and scholars have received IRS notices for tax year 2014 stating that "The information you supplied does not match the information we received from Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, filed by your withholding agent."
Harvard has carefully reviewed many instances of these 2014 notices and has found that the tax withholding reported by the individuals (based on Copy B, C, and D of Form 1042-S) does in fact match the information that we electronically reported to the IRS on Copy A of Form 1042-S. We have also confirmed that we paid the tax withholding to the IRS in a timely manner. We are unable to identify any discrepancy in the data Harvard University has reported with respect to the 2014 1042-S forms. Many other colleges and universities have taken the same steps and come to the same conclusions.
I. If you receive a notice regarding a discrepancy with your 2014 Form 1042-S:
A. Read the documents carefully. Confirm that they are authentic and that they involve a “decrease in credit”, “reduced”, or “eliminated” amount shown in Line 62d.
B. If the decrease in credit on the notice is an amount other than the amount shown in Box 7 of your 2014 Form 1042-S, then there may be an unrelated issue with your tax return.
C. If the “decrease in credit” on the notice equals the amount shown in box 7- Federal tax withheld of your 2014 Form 1042-S from the Harvard University then follow the guidance outlined below in Section II and III*.
II. The IRS has provided the following advice in regards to this issue
Please see the following for the latest update from the IRS.
A. The taxpayer must respond to the notice/letter and should not ignore it.
B. The taxpayer should call the IRS Accounts Management division at the general taxpayer hotline at 1-800-829-1040 to request an 8 - 12 week hold be placed on their 2014 tax accounts, because this issue is currently being reviewed by the IRS. This is a 24-hour number and it is suggested to minimize hold times to call the number early in the morning or later in the evening
III. You may also want to respond in writing to the IRS:
A. You may notify the IRS that you DISAGREE with the proposed reduction in credit of the amount of tax withholding reported on your Form 1042-S.
B. Attach the following items:
- A copy of the IRS Notice or IRS Correspondence Letter that you received indicating you DISAGREE with the changes.
- A copy (B, C, or D) of you 2014 1042-S Form
- A copy of Harvard University’s Letter of 2014 1042-S Form Verification, and
- A copy of Form 1040NR or 1040NR-EZ that you filed for 2014 (it MUST include your signature and the date).
C. Retain a copy of all the documents you send to the IRS for your records.
D. It is generally best practice to send any written response to the IRS via the United States Postal Service “Certified Mail Return Receipt Requested.”
E. Your response letter must be sent to the address as shown on the IRS notice you received.
IV. The IRS Taxpayer Advocate Service (TAS), Systemic Advocacy Management System (SAMS) has offered to assist foreign students who have an IMMEDIATE threat of a levy or lien relating to the specific IRS Notices indicated:
- IRS Notice 501 with a due/response date in the next 30 days.
- IRS Notice 503 with a due/response date in the next 30 days.
- IRS Notice 504 with a due/response date in the next 30 days.
A. Please send a letter to the GTP Support Center support@glaciertax.net as soon as possible and GLACIER will turn it over to the Tax Advocacy Service (“TAS”) to work on a resolution.
B. If you did not receive one of these specific IRS Levy or Lien Notices, or the IRS Levy/ Lien Notice you received is unrelated to the 2014 1042-S discrepancy issue, please do not contact the GTP Support Center. They will not be able to assist you.
V. Harvard University will continue to monitor this issue:
A. We have been in contact with our colleagues at the National Association of College and University Business Officers (NACUBO), GLACIER, the Taxpayer Advocate Service (TAS), and various other universities who are working with the IRS to investigate the matter.
B. For additional information, please refer to the:
- Commentary from accounting firm PricewaterhouseCoopers, March 8, 2016.
- National Taxpayer Advocate's Annual Report and how the 'TAS" has taken steps to resolve this issue, April 15, 2016.
C. We continue to advocate for our international students and scholars affected by this issue, which we believe is related to an IRS mismatch of payment data and IRS account information.
D. Any updates we receive will be posted on our website. Please check back periodically.
E. If you have any questions or concerns, please feel free to contact the Nonresident Tax Compliance Office. If emailing, please indicate "2014 IRS Notice" in the subject line.
* You may consider seeking professional tax advice with any IRS related matter .
