A school that fails to file Form 1098-T faces a per-return penalty that starts at $60 and rises to $340 the longer the failure goes uncorrected, and jumps to at least $680 per return with no annual cap if the IRS finds intentional disregard.1Internal Revenue Service. Information Return Penalties A separate penalty of the same size applies for failing to send the statement to the student, so a single missed form can generate two penalties. For an institution filing tens of thousands of these returns, the exposure runs into the millions before any interest is added.
Penalty Amounts by How Late You Are
Penalties under Section 6721 are assessed per return, and the amount depends on when the institution files a correct return. For returns required to be filed in 2026:2Internal Revenue Service. General Instructions for Certain Information Returns (2025)
- Filed within 30 days of the deadline: $60 per return.
- Filed after 30 days but by August 1: $130 per return.
- Filed after August 1 or never filed: $340 per return.
Each tier is capped annually, and the cap depends on the size of the filer. A large institution, defined as one with average annual gross receipts above $5 million over the prior three tax years, tops out at $4,098,500 at the highest tier, $2,049,000 at the middle tier, and $683,000 at the 30-day tier. A small institution with gross receipts of $5 million or less caps out at $1,366,000, $683,000, and $239,000 across those same tiers.3Internal Revenue Service. Revenue Procedure 2024-40
Double Exposure When the Student Statement Is Also Missed
Section 6722 creates a parallel penalty for failing to deliver a correct 1098-T to the student by the January 31 deadline. The per-statement amounts and caps mirror the filing penalty exactly: $60, $130, or $340 depending on how quickly the statement is corrected, with the same intentional-disregard rules on top.3Internal Revenue Service. Revenue Procedure 2024-40
The two penalties stack. An institution that neither files with the IRS nor furnishes the student statement for the same return owes both. At the top tier, that is $680 per student before any intentional-disregard finding. A wrong Taxpayer Identification Number counts as an incorrect statement and triggers the furnishing penalty on its own, which is why schools are expected to solicit TINs through Form W-9S or an enrollment or financial aid form.1Internal Revenue Service. Information Return Penalties4Internal Revenue Service. Instructions for Forms 1098-E and 1098-T (2026)
When Intentional Disregard Triggers Uncapped Penalties
The annual caps disappear if the IRS finds the failure was intentional. The penalty in that case is at least $680 per return, or 10 percent of the total dollar amount that should have been reported, whichever is greater.5Office of the Law Revision Counsel. 26 USC 6721 – Failure to File Correct Information Returns Because there is no ceiling, an institution that willfully ignores its obligations across a large enrollment can end up with a bill that far exceeds the ordinary large-filer cap. The matching intentional-disregard penalty applies to the student statement under Section 6722 on the same terms.
Errors That Don’t Trigger a Penalty
Not every mistake is penalized. The de minimis safe harbor treats a return or statement as correct if no single dollar amount is off by more than $100, and no amount reported for tax withheld is off by more than $25.5Office of the Law Revision Counsel. 26 USC 6721 – Failure to File Correct Information Returns The same thresholds apply to the student statement.6Office of the Law Revision Counsel. 26 USC 6722 – Failure to Furnish Correct Payee Statements
There is a catch. A student can elect to opt out of the safe harbor for their own statement. Once that election is made, the institution has to correct even a minor error or face the standard per-statement penalty, because a small inaccuracy on a 1098-T can shift the taxpayer’s education credit.
How to Reduce or Eliminate the Penalty
Filing a corrected Form 1098-T before August 1 is the most effective way to bring the exposure down. An institution that missed the deadline but corrects within 30 days pays $60 instead of $340 per return. Correcting between the 30-day mark and August 1 pays $130. After August 1, the full $340 applies and no further reduction is available through timing alone.2Internal Revenue Service. General Instructions for Certain Information Returns (2025)
When the IRS identifies a failure, it sends Notice 972CG, a proposed civil penalty notice covering late filings, missing or incorrect TINs, and e-filing violations.7Internal Revenue Service. 4.19.25 Information Return Penalty (IRP) Procedures The notice gives the institution an opportunity to respond. If no response comes in, the IRS assesses the penalty as proposed.
The main defense is reasonable cause under Section 6724. The IRS will waive the penalty if the institution shows the failure was due to reasonable cause and not willful neglect.8Office of the Law Revision Counsel. 26 U.S. Code 6724 – Waiver; Definitions and Special Rules That means demonstrating ordinary business care combined with circumstances beyond the institution’s control, such as fires, natural disasters, or system failures that destroyed records. A missing student TIN can qualify if the institution shows it solicited the number in a responsible manner, typically by requesting it in writing at least once a year through Form W-9S or an enrollment form.4Internal Revenue Service. Instructions for Forms 1098-E and 1098-T (2026)
A formal abatement request goes on Form 843, Claim for Refund and Request for Abatement, with the reasonable-cause box checked and a written explanation and supporting documentation attached.9Internal Revenue Service. Instructions for Form 843 The request should go in promptly after Notice 972CG arrives.
A Note for Students Whose School Never Sent a 1098-T
These penalties are assessed on the school, not on you. If your school was required to send a 1098-T but didn’t, the IRS instructions for Form 8863 lay out what to do. After January 31 but before you file your return, request the form from the institution and cooperate with any information it needs to produce it. If the school still fails to deliver, you can claim the American Opportunity or Lifetime Learning Credit as long as you can substantiate your enrollment and what you actually paid in qualified tuition and fees through receipts, account statements, or bursar records.10Internal Revenue Service. Instructions for Form 8863 The same substantiation route is open to students whose schools were not required to file a 1098-T in the first place.