The Internal Revenue Service (IRS) has begun auditing students using information it received from the University earlier this year, and at least one student has been asked to pay $735 in taxes on a four year-old state scholarship.

The general counsel's office complied in January with an IRS request to view Harvard's records on students who had received financial aid during the calendar year 1989, Kellie E. Lucy, manager of student receivables, said yesterday. The information included students' names, Social Security numbers, financial aid they received and they tuition paid to Harvard.

Director of Financial Aid James G. Miller said yesterday he believe the IRS intended to crack down on students who violate tax laws.

"I think they wanted to see if people were complying with the rule requiring students to pay taxes on scholarships over a certain amount," he said.

Karen E. Esielonis '80 received a scholarship from Massachusetts in 1989 to help pay for a graduate program in Fine Arts. On Tuesday an auditor from the IRS told her that she had failed to report her scholarship.

"She sat there blithely telling me that I owe the IRS $700," Esielonis said. "At the end of a Ph.D. program, I don't have any money."

Esielonis, who said she simply forgot toregister her scholarship, said she feels the IRSis unfair in targeting students who receivefinancial aid.

"The fact is, if you're on any kind of aid, thechance is you're financially strapped," she saidyesterday. "There are two issues here: one, isthis what the federal government does with itstime, goes after lousy students? And two, why arestudents taxed [for financial aid] anyway? It'sludicrous."

IRS officials were not available for comment.

It is not known if the IRS requestedscholarship information from any other schoolsbesides Harvard.

Harvard initially denied the government theright to see the information, but was forced toturn over the documents after the IRS issued anagency summons, which carries the weight of acourt subpoena.

The University gave the IRS information on atotal of 3500 students