We have been receiving a lot of calls concerning the Taxpayer Relief Act of 1997 Everyone wants to know what we are going to do and how much it will cost.

Some of our clients have expressed interest in looking at the application. This memo announces the availability of a demonstration version of the student loan inquiry application.

Unfortunately, the regulations are not yet 'cast-in-stone' so making a definite statement is difficult at best. What we can say is that we will handle the coding for SAL to process the regulations when they become available. We also will perform the processing for our service clients when the time comes.

Until we have the final ruling, we cannot commit to a set pricing structure. Based on our current understanding of the rules, we estimate that the charge will be approximately one dollar per borrower.

When the regulations are final, we will notify everyone of the exact solution and the precise costs involved.

NACUBO's Web site contains additional information concerning TRA97. The direct address is http://www.nacubo.org/website/tra97/. Refer to the section on: IRS Announcement 98-7: Guidance on Reporting Student Loan Interest.

What follows is a summary of ECSI's projected implementation plan.

Who will receive notification


Any borrower that paid any interest during the first 60 months in which interest payments are required. Even though a borrower must have paid a minimum of $600.00 in 1998, we will need to report all interest paid even if less than $600.00. The IRS states you must report any individual with interest aggregating $600.00 or more for any calendar year on one or more qualified educational loans. Refer to Section 6050S(a).

What should be sent to those that qualify


A written statement which may be either a copy of form 1098-E or an acceptable substitute. Information which must be included:
• Taxpayer name, address and social security number
• The aggregate amount of interest received for the calendar year
• Phone number of the individual serving as information contact for ECSI
• A memo stating that the amount of interest reported as paid may differ from the amount of interest that the payor may be able to claim as a deduction.

When is it reported


This information must be supplied by February 1, 1999. ECSI will probably use the acceptable substitution that the IRS is allowing. We will probably send this information on a standard billing statement which will include all required information. We also plan on inserting a pamphlet describing what TRA97 is and how this information should be reported on their 1998 Federal Tax return.

Added Feature: ECSI will create a collection memo, each tax year stating the year and the amount of interest paid. This information will be stored, by borrower, forever.

What should be sent to the IRS


The regulations under Section 6011 will be amended to require any person required to file 250 or more Forms 1098-E for 1998, to file these returns by magnetic media or electronically. The final procedures for electronic submission has not been finalized as of October 1998. Information that must be supplied is:
• Name, address and SSN or TIN (Taxpayer Identification Number) of borrower
• Name address and TIN of school
• The aggregate amount of interest received for the calendar year.
This information must be supplied by March 1, 1999.