International students across the country may have to wait a whole year before they receive refunds on their tax returns.
Each year, the Internal Revenue Service taxes international students on financial aid for the money they receive from their respective institutions. As a result, these students must later file tax returns indicating the amount the IRS deducted from their scholarship money, in order to receive a refund, as this scholarship money is not a source of income and is therefore supposed to be tax-exempt. However, this year the IRS has delayed the arrival of refunds twice, each for a period of six months, citing the need to review the returns. Although the IRS has not specified the exact reason for the freeze, students will be compensated for the delay at an unspecified interest rate. Still, international students interviewed said the refund is usually of a sizable amount, ranging from $800 to$1,000, and the delay has caused major inconvenience.
“There has been a lot of confusion going on, and at first I thought it was only me before I realized no one else had gotten their returns back yet either,” said Yupei Guo ’17, a student from China who is expecting roughly $1,000 in refunds.
Guo said she was $300 short of the money she needed to pay her tuition in November, a situation that would not have arisen had she received her tax return on time. She was forced to borrow money from a friend in order to meet the fee.
“The delay was not because I had filled out the form wrong, although I am unsure what the reason is,” Guo said.
Additionally, she noted that she is also owed approximately $300 more in tax refunds for her student job at Yale.
Amen Jalal ’17, a student from Pakistan, said the IRS owes her around $1,000, and many of her friends are owed the same.
“It definitely creates a problem in the sense that you expected $1,000 to be in your account at this time but it’s not, so if you expected to be able to use it and now can’t, that’s a problem,” Jalal said. “However, since I’m kind of aware that it won’t come any time soon, it hasn’t caused much difficulties for me.”
The reason for the postponement remains unclear. Director of the Office of International Students & Scholars Ann Kuhlman said that from what OISS understands, the IRS needs additional time to review certain credits on the nonresident tax returns submitted.
Certified public accountant Gary Engler, whose company was cited by OISS in its announcement of the delay on its website, speculated that the cause may be a fraudulent application. Every year, people try to rip the IRS off by falsifying documents and withholding forms, he said, leading them to receive refunds that they are not entitled to. He added that if this happens, the IRS system may not be sophisticated enough to detect the source, leading to an indefinite hold on all the forms until the culprit is found.
“The only thing students can do is probably call the IRS and apply pressure,” Engler said. “The problem with calling the IRS is you need to make sure you’re in a comfortable chair and have something to eat while you wait for them to answer, and then you might get an answer that satisfies you or not.”
The timing of the suspension has varied from person to person. Guo said she received the second notice around October indicating that an additional delay would be necessary. Mevlut Ikiz ’17, a student from Turkey, said he received a letter in November explaining that he would have to wait another six months for his tax refunds.
Yale is not the only college experiencing this difficulty. Kuhlman said international students around the U.S. are faced with the same challenge.
“[OISS] continues to explore options for expediting these returns. Students experiencing financial hardships because of a delayed tax refund can be in touch with the Office of Student Financial Services which is aware of these delays,” Kuhlman said. “Students can also be in touch with OISS with questions about filing the 2015 tax return.”
Yale has 4,462 international students and scholars, according to the Office of Institutional Research.