[Congressional Record (Bound Edition), Volume 147 (2001), Part 17]
[House]
[Pages 23861-23864]
[From the U.S. Government Publishing Office, www.gpo.gov]



   AMENDING INTERNAL REVENUE CODE TO SIMPLIFY REPORTING REQUIREMENTS

  Mr. HULSHOF. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 3346) to amend the Internal Revenue Code of 1986 to simplify 
the reporting requirements relating to higher education tuition and 
related expenses.
  The Clerk read as follows:

                               H.R. 3346

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SIMPLIFICATION OF REPORTING REQUIREMENTS RELATING 
                   TO HIGHER EDUCATION TUITION AND RELATED 
                   EXPENSES.

       (a) Amendment Relating to Persons Required To Make 
     Return.--Paragraph (1) of section 6050S(a) of the Internal 
     Revenue Code of 1986 (relating to returns relating to higher 
     education tuition and related expenses) is amended to read as 
     follows:
       ``(1) which is an eligible educational institution which 
     enrolls any individual for any academic period;''.
       (b) Amendments Relating to Form and Manner of Returns.--
     Subsection (b) of section 6050S of such Code is amended as 
     follows:

[[Page 23862]]

       (1) Paragraph (1) is amended by inserting ``and'' after the 
     comma at the end.
       (2) Subparagraph (A) of paragraph (2) is amended to read as 
     follows:
       ``(A) the name, address, and TIN of any individual--
       ``(i) who is or has been enrolled at the institution and 
     with respect to whom transactions described in subparagraph 
     (B) are made during the calendar year, or
       ``(ii) with respect to whom payments described in 
     subsection (a)(2) or (a)(3) were made or received,''.
       (3) Paragraph (2) of section 6050S(b) of such Code is 
     amended by striking subparagraph (B) and redesignating 
     subparagraphs (C) and (D) as subparagraphs (B) and (C), 
     respectively.
       (4) Subparagraph (B) of section 6050S(b)(2) of such Code, 
     as redesignated by paragraph (3), is amended to read as 
     follows:
       ``(B) the--
       ``(i) aggregate amount of payments received or the 
     aggregate amount billed for qualified tuition and related 
     expenses with respect to the individual described in 
     subparagraph (A) during the calendar year,
       ``(ii) aggregate amount of grants received by such 
     individual for payment of costs of attendance that are 
     administered and processed by the institution during such 
     calendar year,
       ``(iii) amount of any adjustments to the aggregate amounts 
     reported by the institution pursuant to clause (i) or (ii) 
     with respect to such individual for a prior calendar year,
       ``(iv) aggregate amount of reimbursements or refunds (or 
     similar amounts) paid to such individual during the calendar 
     year by a person engaged in a trade or business described in 
     subsection (a)(2), and
       ``(v) aggregate amount of interest received for the 
     calendar year from such individual, and''.
       (c) Conforming Amendments.--Subsection (d) of section 6050S 
     of such Code is amended--
       (1) by striking ``or (B)'', and
       (2) in paragraph (2), by striking ``subparagraph (C)'' and 
     inserting ``subparagraph (B)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to expenses paid or assessed after December 31, 
     2002 (in taxable years ending after such date), for education 
     furnished in academic periods beginning after such date.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Missouri (Mr. Hulshof) and the gentleman from Maryland (Mr. Cardin) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Missouri (Mr. Hulshof).


                             General Leave

  Mr. HULSHOF. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks and include extraneous material on H.R. 3346.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Missouri?
  There was no objection.
  Mr. HULSHOF. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, education is the great equalizer, and getting a college 
education remains a part of the American dream. Yet affording that 
education at an institution of higher learning can be a nightmare for a 
prospective student or that student's family.
  According to a 1997 GAO report, since the early 1980s college tuition 
has increased by 234 percent, which of course far outpaces the cost of 
living or any rise in family income. Some students balance their class 
work with part-time jobs, others rely on financial aid packages or 
scholarships. This body, Mr. Speaker, has attempted in the past to ease 
the financial burden. Back in 1997 Congress passed and former President 
Clinton signed into law the Taxpayer Relief Act of 1997. This 
legislation created the Hope Tax Credit as well as the Lifetime 
Learning Tax Credit to help families afford the cost of sending a child 
to college.
  Since then we have built on our work. We have added to the success of 
the 1997 bill. We have expanded education savings account. We have made 
prepaid tuition plans more attractive, and we have expanded the student 
loan interest deduction.
  When the merits of the Hope Credit and the Lifetime Learning Credit 
were being considered back in 1997, the potential compliance costs for 
colleges and universities were raised as a potential drawback. In fact, 
I recall and probably the gentleman from Maryland (Mr. Cardin) may 
recall the particular hearing we had in front of the Committee on Ways 
and Means and the former Treasury Secretary was appearing before us, 
and I asked Mr. Rubin about the compliance cost. We had been alerted to 
some potential substantial administrative burdens that colleges and 
universities were going to have to undertake, even while implementing 
this worthwhile legislation. I recall the answer that Mr. Rubin gave; 
he felt it would be a small, insignificant cost.

                              {time}  1745

  In fact, I think he said it would be the cost of a pencil and a piece 
of paper. Well, as C-SPAN was covering that hearing live that day, the 
phone lines in our congressional office began to light up as school 
administrators from around the country began to call, again with this 
concern about this burden, this compliance cost that they would have to 
undertake if, in fact, we enacted the HOPE scholarship or the HOPE tax 
credit, as well as the lifetime learning credit and, unfortunately, 
their premonition has been borne out. It has been clear that our 
Nation's institutions of higher learning have faced significant 
increased administrative burdens, which brings us today.
  The bill before us, H.R. 3346 that has been introduced by the 
gentleman from Illinois (Mr. Manzullo), accomplishes the goal of 
reducing administrative burdens on schools, while retaining the 
integrity of the HOPE and lifetime learning credits. We accomplish this 
by modifying how tuition amounts are reported and also eliminating an 
unneeded reporting requirement in current law that colleges and 
universities provide the Internal Revenue Service with the name, 
address, and taxpayer identification number of taxpayers who could 
claim students attending the school as dependents. While these changes 
may seem minor, I can assure my colleagues that they will greatly 
reduce the administrative burdens on our colleges and universities. I 
urge this body to be supportive of H.R. 3346.
  Mr. Speaker, I reserve the balance of my time.
  Mr. CARDIN. Mr. Speaker, I yield myself such time as I may consume.
  First let me thank the gentleman from Missouri (Mr. Hulshof) for 
bringing forward this legislation. I agree with him that this is an 
important bill that helps us move forward on making it easier for 
families to afford college education and reducing the administrative 
burden of tax laws. I also want to congratulate the gentleman from 
Illinois (Mr. Manzullo) for bringing forward this bill. It is his 
legislation. I thank him for putting together a sensible bill that will 
reduce the costs of compliance without raising the level of potential 
abuse. That is what we all try to do.
  First, Mr. Speaker, this bill makes it easier for families to be able 
to have the HOPE scholarship and lifetime learning tax credit which 
this body, this Congress, passed in 1997, that allows up to a $1,500 
tax credit for higher education expenses. The gentleman from Missouri 
(Mr. Hulshof) is correct. Education is a very important part of the 
American dream. We want to make it easier for American families to 
afford higher education. We want all Americans who can benefit from 
higher education to be able to afford higher education for their 
children, and the HOPE scholarship and lifetime learning tax credit 
carries out that commitment.
  Mr. Speaker, many times Congress, in well-intended legislation, 
causes burdens to the private sector that are not really necessary. We 
are well intended in what we think is necessary in order for 
compliance. I remember working with the gentleman from Cincinnati, Ohio 
(Mr. Portman), on IRS reform, and one of our principal objectives was 
to make the Tax Code easier to understand and to make it simpler for 
people to comply with the laws that we passed. This bill does that. 
This bill makes it easier for compliance.
  The first part on reporting, the current law makes it difficult for 
some colleges to be able to report the dollar amount that is impacted 
by the credit. We make it a little bit easier by allowing the college 
to report the amount of expenses or the amount that is paid. It is a 
simple change, but it allows a lot of colleges to allow their current 
computer program to be adequate to deal

[[Page 23863]]

with the reporting needs of the Federal Government, rather than 
requiring them to change their entire system in order to meet the needs 
of the tax credit. That is common sense.
  The second is the reporting of the taxpayer identification number. We 
already have the taxpayer identification number of the student, and 
that is all we really need because we can match that, and the IRS has 
indicated they can match that, rather than requiring a reporting number 
of the person who claims the child, adding to the complexity again, and 
adding to information that is not readily available by the college and 
university that is reporting the information to the government.
  So the changes that are made in the legislation are common sense. 
They make it easier for the colleges and universities to comply with 
reporting requirements. It does not add to the potential abuse of tax 
law and it makes it easier for the law that Congress passed in 1997 to 
be utilized by American families. It is a bipartisan bill. It is a bill 
that I hope every Member of this body will support.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HULSHOF. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Illinois (Mr. Manzullo), the author and original sponsor 
of this legislation.
  Mr. MANZULLO. Mr. Speaker, of the many Federal regulations with which 
colleges and universities are required to comply, one of the most 
onerous is that associated with the HOPE scholarship and lifetime 
learning tax credit. Originally enacted as part of the Taxpayer Relief 
Act of 1997, the tax credits were intended to give parents back more of 
their hard-earned money, up to $1,500 for the first 2 years of college, 
so that they could better afford to send their children to school.
  While we were successful in providing this tax relief for students 
and families, we discovered an unintended consequence: an unfunded 
mandate burdening colleges, trade schools, community colleges, and 
universities in the form of a reporting requirement administered by the 
IRS.
  I became aware of this regulatory issue during the fall of 1997. I 
was discussing several concerns with Dr. La Tourette, president of 
Northern Illinois University. While talking about the merits of the 
HOPE scholarship, he dropped the bombshell on me and informed us of the 
new Federal requirements forcing all 6,000 institutions of higher 
education in this country to collect unprecedented information on their 
students and disseminate that information to the IRS.
  I knew compliance with the reporting requirement would be expansive 
and expensive and would ultimately be borne by the very families that 
they were trying to help with the HOPE scholarship program. Both large 
and small institutions have been hit hard by the reporting requirement. 
The cost to schools to implement and abide by these regulations will 
soar into the hundreds of millions of dollars. And, of course, they 
will be passed on to the consumers of education, which are the parents 
and the students.
  Since my conversation with Dr. La Tourette, I have worked with 
members of the higher education community and with Commissioner Charles 
Rossotti of the IRS to simplify the reporting requirements and ease the 
burden of the regulations on the colleges and universities of this 
country. Today, I am proud to say that H.R. 3346 is the product of a 
partnership that evolved between the IRS, the Treasury Department, the 
higher education community, and myself, and this can serve as a model 
for how we can positively impact higher education in the future by 
working together.
  Specifically, while H.R. 3346 maintains the reporting requirement, 
the bill eliminates certain elements of the law such as reporting a 
third party's Social Security number, and changes others, such as 
allowing schools to report the amount students are billed or the amount 
they are paid. It is my hope that the simplifications instituted as 
part of H.R. 3346 will make the reporting significantly easier on 
colleges and universities.
  Early estimates from Northern Illinois University predict that as a 
result of the passage of this bill, this school could avoid a one-time 
cost of approximately $90,000. This includes the costs of program 
computer systems to accommodate requirements included in the original 
legislation that are not included in the pending legislation, as well 
as what it would cost initially to implement Social Security number 
reporting of the taxpayer claiming the student as a dependent.
  Additionally, the university would have incurred ongoing costs on an 
annual basis for solicitation and data entry of the student-reported 
information, and those costs are estimated at $30,000 a year. The 
University of California's system expects to save $1 million in the 
first year alone as a result of H.R. 3346. Overall, the savings the 
schools will attain as a result of this legislation are very 
significant. When we consider that most institutions of higher 
education would incur costs of similar proportion, the impact is 
particularly traumatic.
  I would be remiss if I did not take a moment to heartily thank 
Commissioner Rossotti with whom we met on no less than three different 
occasions in order to fashion this legislation. I also want to thank 
Curt Wilson and Beverly Babers of the staff. I would like to thank 
Northern Illinois University, both former president Dr. La Tourette and 
current president Dr. John Peters and Kathe Shineham from the school 
for their insights and efforts as we have worked to craft this 
legislation. This bill is a memorial to Dr. Ruth Mercedes-Smith, former 
president of Highland Community College, who was killed in a car 
accident several months ago. Her support for our work was invaluable. 
Also, Dr. Chapdelaine of Rock Valley Community College and Dr. LaVista 
of McHenry Community College, and the National Association of Colleges 
and Universities Business Offices. All of these groups worked 
tirelessly together in order to craft the legislation. It took us 4 
years to do it. During that period of time, the IRS worked with us, 
they withheld the implementation of these regulations because they knew 
that the goal was worthy. Lastly, I want to thank Sarah Giddens of our 
staff who, for 4 years, tirelessly worked on this legislation, dogging 
it dot by dot, i by i, in the hundreds of meetings, literally, that she 
had and the hours that she poured into this piece of legislation.
  Mr. Speaker, it is a great piece of legislation. Instead of spending 
money on regulatory compliance, the schools can spend that money doing 
what they do best, and that is educating the kids.
  Mr. CARDIN. Mr. Speaker, it is my pleasure to yield 5 minutes to the 
gentlewoman from Florida (Mrs. Thurman), a distinguished member of the 
Committee on Ways and Means.
  Mrs. THURMAN. Mr. Speaker, I thank the gentleman for yielding me this 
time, who may have to watch my university play in the Orange Bowl. We 
were just discussing that over here. But I want to say to the gentleman 
from Illinois (Mr. Manzullo) how welcome this piece of legislation is. 
I do not know if my colleagues are reading what is happening in Florida 
right now, but the legislature is in a special session specifically for 
the purpose of cutting their budgets. The headline news in Florida is 
that the State universities were hit with cuts in excess of $100 
million, while community colleges must deal with $33 million.
  As the gentleman from Missouri (Mr. Hulshof) has said, one of the 
things that makes our country great is the ability for us to have an 
educated population. What we did in 1997 in providing the $1,500 tax 
credit for the HOPE scholarship and the lifetime learning tax credits I 
was hoping would not be taken away from by the administrative 
nightmares that they might be facing, as my colleagues can imagine, 
also based on the numbers that we heard of the increased tuition. I do 
not know where those monies are going to come from when they cut them, 
but certainly we did not want them to have to be raised in tuition. 
With the gentleman's help, we are going to be able to see this $1,500 
and the bureaucracy cut

[[Page 23864]]

so that our universities and our community colleges are not going to 
have to be hiring new staff and setting up new computer programs, so 
this might help them in looking at their overall budgets if we get this 
passed and through over in the Senate.

                              {time}  1800

  I just want to say that, in conclusion, because of the work and the 
people that the gentleman has recognized, this is a work that the 
higher education community has asked for. They have asked for the 
greater flexibility in reporting information to the IRS about the 
education tax credits. I believe that H.R. 3346 provides that requested 
flexibility through the simplification of the Tax Code.
  I might just say, for all of us who serve on the Committee on Ways 
and Means, that it is always a pleasure for us to be able to come to 
the floor and talk about the idea that we are simplifying, and not 
adding to, the tax codes in this country.
  I think it is something that the American people want us to be doing, 
have suggested that we do; and as we can see, as we work in a 
bipartisan manner, in fact we can provide not only the dream for our 
students and to help our universities, but we can also help the 
taxpayers of this country. So we thank the gentleman for his 
leadership.
  Mr. HULSHOF. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I have a few concluding remarks.
  First, I want to amplify a point that my friend, the gentleman from 
Maryland (Mr. Cardin), made regarding the situation regarding the 
computer systems.
  The point is that as educational institutions begin to raise some 
concerns that these new reporting requirements would require their 
schools to completely revamp their computer systems at a substantial 
cost, these institutions noted that complying with the law's 
requirement to report tuition payments received would be difficult, and 
that because schools keep a running total of the payments that they 
receive from students, in other words, payments are not applied 
separately to tuition, but instead are applied to a student's total 
outstanding balance that may include room and board, books, student 
fees for recreational activities, or other costs, and, moreover, 
payments are not applied to any particular academic year. As a result, 
these institutions would have had to change their accounting and 
computer systems dramatically to make them compatible with reporting 
requirements. We have undertaken, instead, a change in those reporting 
requirements so those colleges and universities will not have to 
undertake that substantial cost.
  As a final comment, I would just advise my colleagues that in the 
1999 calendar year, the Hope scholarship credit was claimed by 
3,334,000 students; the lifetime learning tax credit was claimed for 
3,575,000 college students.
  Clearly, the work we have done here in Congress back in 1997 has 
taken a large step forward as far as making higher education more 
affordable. I think we are taking an additional step forward for the 
administrators of these colleges and universities by reducing their 
burden.
  Mr. CARDIN. Madam Speaker, I yield myself the balance of my time.
  Madam Speaker, let me just concur with my friend, the gentleman from 
Missouri (Mr. Hulshof).
  Also, I would like to compliment the Internal Revenue Service. We do 
not often say that. But they have worked with us to implement, as the 
gentleman from Illinois (Mr. Manzullo) has pointed out, this part of 
the code in a taxpayer-friendly way. If we look at the 1098-T form and 
8863 form, I think we will find both of those forms are easy for the 
taxpayer to use.
  They worked with us to modify the law in regard to the unnecessary 
burden upon the institutions of higher education. As a result, we have 
had, I think, the right spirit in simplifying the Tax Code to carry out 
the purposes of Congress.
  This legislation is important legislation, and I urge my colleagues 
to support it.
  Mr. HULSHOF. Madam Speaker, I urge adoption of H.R. 3346, and I yield 
back the balance of my time.
  Mr. CARDIN. Madam Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mrs. Biggert). The question is on the motion 
offered by the gentleman from Illinois (Mr. Manzullo) that the House 
suspend the rules and pass the bill, H.R. 3346.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

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