• Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Pridgeon & Zoss, PLLC

Just another WordPress site

  • Home
  • Firm Overview
    • Review Us
  • Meet Our Attorneys
  • Tax Law Services
    • CP504 Notice in MN
  • Professional Referrals
  • Our Required Retainer Deposit & Fees
  • Blog
  • Contact Us
Home / IRS / IRS offers a glimmer of relief to Corinthian students
  • Home
  • Firm Overview
    • Review Us
  • Meet Our Attorneys
  • Tax Law Services
    • CP504 Notice in MN
  • Professional Referrals
  • Our Required Retainer Deposit & Fees
  • Blog
  • Contact Us
Call
Contact
Blog

IRS offers a glimmer of relief to Corinthian students

In the summer of 2014, the Minnesota Office of Higher Education ordered Corinthian Colleges Inc. to stop enrolling students from this state. At that point, though, about 300 students from Minnesota were enrolled in traditional and on-line programs operated by the for-profit college system. (Corinthian’s sole Minnesota campus was the Everest Institute in Eagan.)

Corinthian eventually closed Everest down in April 2015. Any students still in the system were left with mountains of student debt and course credits that other institutions were reluctant to transfer. Many graduates had already felt the sting of realizing that their pricey educations had not prepared them for the jobs they thought they would get.

The U.S. Department of Education responded by encouraging students to take advantage of the closed school debt forgiveness program or the defense to repayment process. Every silver lining has a cloud, though, and the Closed School and borrower defense options had a fairly large one.

At tax time, the dollar amount forgiven could be classified as taxable income.

For the most part, the tax code treats any debt written off by the creditor as income. The IRS has added exceptions — for example, mortgage refinancing obtained through the federal Home Affordable Modification Program — but forgiven student loans were not among them.

Rather than allowing Corinthian students to forgo paying Peter while still robbing Paul, the IRS announced in early December that Corinthian students would be exempt from the rule. Specifically, the new rule (Rev. Proc. 2015-57) will not treat federal student loans discharged under the defense of repayment discharge process as taxable income.

For the most part.

We’ll explain in our next post.


Sources:

Accounting Today, “IRS Gives Tax Break to Former Corinthian College Students,” Michael Cohn, Dec. 4, 2015

U.S. Department of Education Federal Student Aid, “Information About Debt Relief for Corinthian College Students,” accessed at studentaid.ed.gov on Jan. 6, 2015

On Behalf of Pridgeon & Zoss, PLLC Jan 06 2016 IRS

Primary Sidebar

Do Not Delay Responding to a Tax Notice

Name(Required)

Practice Areas

Tax Disputes

  • Tax Litigation
  • Audits
  • Tax Appeals
    • Appealing a Levy Action

Business & Payroll Taxes

  • Trust Fund Assessments
  • Complying with Sales and Use Tax Laws

Self-Employed

  • No Taxes Withheld

Outstanding Balances

  • IRS Collections and Currently Not Collectible Status
  • Settlement Options
    • Offers in Compromise
    • Installment Agreements

Latest Blogs

What is a Trust Fund Recovery Penalty?

January 31, 2023

A Guide to the Minnesota Tax Appeal Process

January 27, 2023

The Secret to Successful Self-Employment

October 19, 2022

Things You Should Expect Being Self-Employed in Minnesota

October 13, 2022

The Importance of Source Documents

July 7, 2022

Footer

Edina Tax Law Office

7301 Ohms Lane, Suite 420
Edina, MN 55439

Telephone: 952-835-8320

Fax: 952-835-0201

St. Anthony Tax Law Office:

2812 Anthony Lane S, Suite 200
St. Anthony, Minnesota 55418

Telephone: 612-455-8948

Pridgeon & Zoss, PLLC provides legal counsel for clients in Minnesota and Western Wisconsin

© 2023 Pridgeon & Zoss, PLLC. All Rights Reserved.

Disclaimer | Site Map | Privacy Policy