[Congressional Record Volume 145, Number 105 (Thursday, July 22, 1999)]
[Senate]
[Pages S9073-S9074]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS (for herself, Mr. DeWine, and Mr. Smith of 
        Oregon):
  S. 1412. A bill to amend the Internal Revenue Code of 1986 to limit 
the reporting requirements regarding higher education tuition and 
related expenses, and for other purposes; to the Committee on Finance.


                 HIGHER EDUCATION REPORTING RELIEF ACT

  Ms. COLLINS. Mr. President, today I rise to introduce The Higher 
Education Reporting Relief Act of 1999, which will reduce the 
burdensome reporting requirements placed on educational institutions by 
the Hope Scholarship and Lifetime Learning Tax Credits. I am pleased to 
be joined by my principal cosponsor, Senator DeWine, who has been a 
leader on this and many other education issues, and by one colleague 
Senator Gordon Smith, who shares our concern for the reporting burden 
we are placing on our institutions of higher education.
  When Congress created the Hope Scholarship and the Lifetime Learning 
Tax Credits, it unfortunately imposed a burdensome and costly reporting 
requirement on our universities, colleges and proprietary schools. If 
implemented, the regulations will require schools to provide the IRS 
with information on their students that is difficult to obtain, 
including the taxpayer identification number of the individual who will 
actually claim the tax credit generated by the student. In many cases, 
this individual will not be the student but rather his or her parent or 
parents.
  In the words of the President of the University of Maine at 
Farmington:

       At a time when we are working to increase access and to 
     contain college costs, new government reporting requirements 
     are working against us. We will need to add personnel, not in 
     support of our educational functions but to comply with new 
     IRS regulations. This is not sensible and it is definitely 
     not in the interests of the people we are here to serve.

  I think that her words say it very well.
  Already, the University of Maine System has been forced to spend 
$112,000 to meet the Hope Scholarship reporting requirement, and the 
most burdensome requirements have not yet become mandatory. In total, 
these reporting requirements are estimated to cost America's 
postsecondary educational institutions as much as $125 million. This 
burden does not make sense.
  Last year, by passing the Collins-DeWine amendment to the Internal 
Revenue Service Restructuring and Reform Act, the Senate eliminated one 
of the most difficult reporting requirements. Our amendment freed 
schools from the requirement to report financial aid received by a 
student from a third party and held them responsible for only informing 
the IRS about financial aid that a school actually administered. In 
addition, the conference report on the act recognized the problem faced 
by schools and deferred the implementation of full reporting 
requirements until the IRS had issued final guidelines. Since the final 
reporting requirements have not been issued, this deferral remains in 
effect for tax year 1999.
  The conference report further urged the IRS to modernize its computer 
systems to include the capacity to match a dependent student's taxpayer 
identification number with the return of the person claiming the 
student as a dependent. This is the true answer to this problem. 
Unfortunately, this has not yet been done. If this step is not taken, 
institutions of higher education will be required to provide this 
burdensome & costly information to the IRS--a very difficult process.
  The legislation we introduce today will defer the implementation of 
the reporting requirements for three years--through tax year 
2001. Further, it will require the IRS to upgrade its data processing 
systems along the lines recommended by the conference report. Today, as 
I mention, the IRS has not done this. The IRS will be required to make 
this change in time for processing tax returns for the year 2002. We 
have included this delay to give the IRS 2 years after it has been 
completed dealing with any data processing problems caused by the year 
2000 problem.

  The rationale for the Hope and the Lifetime Learning credits is to 
make postsecondary education more affordable and therefore more 
accessible. What Congress has given with one hand it has taken away in 
part with its regulatory hand. The cost of conforming to the regulatory 
requirements will inevitably result in increases in tuition, chipping 
away at the benefit of the tax credits. We need to correct this 
problem. The $112,000 that the University of Maine has already been 
forced to spend to comply with the law clearly is going to be passed on 
to the students in increased tuitions.
  Last year, Senator DeWine and I introduced the Higher Education 
Reporting Relief Act that would have completely repealed the reporting 
requirements imposed on educational institutions. Because of the cost 
of that approach, we have reworked last year's bill in a way that will 
accomplish its most important objectives while substantially reducing 
its potential costs to the Treasury. Our legislation would still leave 
a reporting burden on the schools but a much more modest and reasonable 
one that takes into account who is best equipped to report the 
information that the IRS needs to administer the law.
  I hope our colleagues will join us in supporting the Higher Education 
Reporting Relief Act of 1999.
  I yield the reminder of my time to Senator DeWine.
  The PRESIDING OFFICER. The distinguished Senator from Ohio is 
recognized.
  Mr. DeWINE. I am delighted to again join with my distinguished 
colleague from the State of Maine to try to give some relief to 
colleges and universities. As she has pointed out, this burden placed 
by Congress was unintended. I

[[Page S9074]]

seriously doubt if anyone thought that aspect of the legislation 
through or fully understood what kind of costs this would impose on our 
colleges.
  The Senator has indicated that Maine, for example, has already been 
hit with over $100,000 in costs. We could multiply that around the 
country for every university and every college. This ultimately, of 
course, will go where all costs go, to the students and the parents.
  This is something we should deal with and we should deal with very 
quickly. I join this morning with my colleague from Maine to introduce 
the Higher Education Reporting Relief Act. As she has indicated, this 
is the second time she and I have introduced legislation to provide 
some very much needed paperwork relief for the colleges and 
universities of our country.
  A compromise version of the legislation we introduced last year was 
passed by Congress as part of the IRS reform bill. Senator Collins and 
I are here today to complete that very important work and to do what 
has remained undone from last year.
  As my colleague from Maine has indicated, what prompted the need for 
this legislation was the Hope scholarship and the Lifetime Learning tax 
credit. This legislation required colleges and universities to comply 
with very burdensome and costly regulations. Schools were required to 
issue annual reports to students and the Internal Revenue Service 
detailing the students' tuition payments. The IRS planned to use the 
reports to monitor the eligibility of students who apply for the 
education tax credits. These reporting requirements require colleges 
and universities to spend millions of dollars to implement and 
maintain.
  The legislation Senator Collins and I were able to pass last year 
eliminated many of the most burdensome reporting requirements, yet 
there are burdensome requirements that still remain law. It is time, we 
believe, to finish the job we started last year.
  Our bill will further reduce the reporting requirements by making two 
very commonsense changes to our Tax Code. First, the IRS will be 
prohibited from imposing any new reporting requirements on colleges and 
universities prior to the year 2002. No school of higher education 
should have additional IRS requirements imposed while it is still 
developing its reporting system.
  Second, the IRS will be required to update its computer system by the 
end of 2002. The IRS computer system would be updated to make it 
capable of matching the IRS taxpayer identification number of the 
student with the person claiming this child as a dependent. This update 
would greatly reduce the reporting burden of the Hope scholarship.
  After this update, when a parent uses the Hope scholarship, the IRS 
will be able to electronically verify that a family was qualified to 
use this deduction. This process will eliminate a great deal of costly 
and time-consuming paperwork for the colleges and universities of our 
Nation. This legislation brings a simple, fair, commonsense solution to 
the unintentional barriers created by the reporting requirements of the 
Hope scholarship and the Lifetime Learning tax credit. It would 
represent significant savings to our colleges and to our universities.
  I certainly hope the Senator from Maine and I will once again be 
successful this year, as we were last year, in bringing relief to 
institutions of higher education. I invite my colleagues in the Senate 
to join as cosponsors.
  I, once again, thank my colleague from Maine for her leadership on 
this legislation. She is a true leader in the area of education and has 
done a great deal of work in this area. This bill is one more example 
of her true understanding of how the real world works--what happens in 
our home States when Congress takes actions that, frankly, result in 
unintended consequences. The unintended consequences in this case are 
added burdens on our colleges, costs that our colleges have to bear, 
costs that our colleges then have to turn around and impose on parents 
and students.
  Again, I thank my colleague from Maine for once again being a true 
leader in this area.
                                 ______