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IRS WAIVES PENALTIES FOR STUDENT LOAN INFORMATION RETURNS

September 20, 2004

The IRS last week waived penalties on lenders for failing to properly report 2004 receipts of capitalized interest or origination fees for qualified student loans (Notice 2004-63). A recipient of such payments qualifies for the waiver if it:

   (1) files and furnishes in a timely 
   manner a Form 1098-E (or other 
   appropriate information statement) that 
   (i) includes the amount of interest 
   (except for any loan origination fees 
   or capitalized interest) received in 
   2004 in box 1, (ii) does not include a
   check in box 2, and (iii) includes all 
   other required information; and

   (2) furnishes a statement to the 
   borrower indicating that the amount of 
   interest reported in box 1 of Form 
   1098-E for calendar year 2004 does not 
   include payments attributable to either
   loan origination fees or capitalized 
   interest received on qualified
   education loans made on or after 
   September 1, 2004, and that the 
   borrower may be able to deduct amounts 
   in addition to the amount reported in 
   box 1.

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