Two years ago, I received a grant from Teach For America that went towards my masters at LMU. The money actually went straight from TFA to LMU, and I received a 1099 form stating the amount of the grant. I confirmed with the IRS at the time that as long as the money was being used for tuition, it would not be taxed.

Last week, I received a bill from the IRS in the amount of $1200 (grant was for $4700), in which it stated that this was income that I had not paid taxes on. I have proof from TFA and LMU that this was indeed a grant that I was never in possession of, and yet an IRS agent told me this morning that because the 1099 didn't clear it as educational money, it may be taxable even if their was proof to the contrary. He didn't say that I would owe for sure, but I am confused as to why this is even a possibility.

Thank you.