According to guidance from the IRS that was updated as of May 18, higher education institutions now might have a requirement under IRC Section 6050S to report Higher Education Emergency Relief Fund (HEERF) grants awarded to students. This is a change from IRS guidance applicable to 2020, which stated that HEERF grants were not subject to Form 1098-T, “Tuition Statement,” reporting.
Eligible educational institutions (generally including colleges, universities, vocational schools, or other postsecondary educational institutions) must provide students a Form 1098-T to report payments received for qualified tuition and related expenses (QTRE), such as books, supplies, and equipment needed for a course of study. QTRE payments are reported in Box 1 of Form 1098-T. Scholarships or grants administered and processed by the educational institution are reported in Box 5 of Form 1098-T.
The HEERF was established as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was enacted by Congress on March 27, 2020. Higher education institutions could use certain HEERF funds to support students with financial needs related to the COVID-19 pandemic. Additional HEERF funds subsequently were made available through the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), signed into law on Dec. 27, 2020 (HEERF II), and through the American Rescue Plan Act of 2021 (ARP), signed into law on March 11, 2021 (HEERF III).