The Internal Revenue Service (IRS) and Federal Student Aid (FSA) have announced that the Data Retrieval Tool (DRT) on and will remain unavailable until extra security protections can be added. The free service allowed student loan applicants and their parents to transfer tax data from a taxpayer’s federal tax return directly to a Free Application for Federal Student Aid (FAFSA) form, eliminating the need for extra forms and paper. The service has been available since the 2009-10 school year.
The Data Retrieval was shut down earlier this month in a move the IRS said would make it “unavailable for several weeks.” It turns out that it will be offline for much longer. In a joint statement from IRS and FSA released today, the organizations said, “While we are working to resolve these issues as quickly as possible, students and families should plan for the tool to be offline until the start of the next FAFSA season.” (emphasis added)
When the DRT was initially taken down, the IRS characterized it “as a precautionary step following concerns that information from the tool could potentially be misused by identity thieves.” The IRS has now clarified that “[i]dentity thieves may have used personal information obtained outside the tax system to access the FAFSA form in an attempt to secure tax information through the DRT.” The IRS says that it is reviewing the extent to which those efforts contributed to fraudulently filed tax returns. So far, the agency has identified instances where additional levels of fraud review have stopped questionable tax returns by filers who also accessed the DRT.
The IRS says that, as it identifies taxpayers with personal information at risk, it is marking and locking down those taxpayer accounts to provide additional protection against the filing of a fraudulent tax return with the taxpayer’s information. The IRS also is finalizing plans to notify affected taxpayers by mail about possible identity theft concerns.
“We know this tool is an easy way for students and families working on applications to access their financial data,” said IRS Commissioner John Koskinen. “While this tool provides an important convenience for applicants, we cannot risk the safety of taxpayer data. Protecting taxpayer data has to be the highest priority, and we will continue working with FSA to bring this tool back in a safe and secure manner.”
That doesn’t mean that taxpayers are happy about the inconvenience. James W. Runcie, FSA chief operating officer, said, “We have heard from students, parents, and the financial aid community that applying for aid is harder without the DRT. We will do all we can to help students and families successfully submit applications while the tool is unavailable and remain committed to protecting applicants’ personal information.”
Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators (NASFAA), said about the continued outage, “We are very disappointed to hear that the Data Retrieval Tool, a resource students and families have come to rely upon and which our current application and verification processes are built, will be offline for an extended period of time. While we understand the need to ensure proper security, IRS Commissioner John Koskinen’s statement that this tool merely provides a ‘convenience for applicants’ betrays a disheartening lack of understanding about how vital this tool has become in streamlining the financial aid application process.”
NASFAA recommended that the Department of Education take immediate steps to mitigate the negative effects for students, including:

  • Updating and correcting FAFSA information and instructions across federal websites regarding the availability of the DRT. Students are still reporting that they are being directed during the application process to the nonfunctioning DRT.
  • Allowing signed copies of tax returns from applicants to satisfy verification documentation requirements in place of DRT information or IRS tax transcripts.
  • Revising the verification selection criteria to provide a more generous tolerance to ensure that the number of students selected for verification remains stable and manageable for institutions so that financial aid processing can continue uninterrupted.

For now, however, those steps are not being taken. So what can you do while the DRT is down?
You can find the information you need to complete the FAFSA on a previously filed tax return. If you are completing a 2016–17 and 2017–18 FAFSA, you should manually enter your 2015 tax information from the tax return you filed in 2016 (not your 2016 tax information that you will file in 2017). If you don’t have a copy of your tax return and can’t access the tax software or contact the tax preparer who filed your return, you can order a tax transcript directly from IRS. The Get Transcript tool is available online at, or you can call 1.800.908.9946 to order a copy to be mailed to you.
For the most recent FAFSA cycle, there were 19,757,764 total applications. Approximately one-quarter of those applications are students completing FAFSA for the first time. FAFSA is required for Title IV federal financial aid purposes.

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Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.

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