Why the present tense?

Hi,

Can you tell me why the present tense is used Because you are doing it at the present time, meaning the time that you wrote the letter. However, simple present here gives a very formal tone to your letter. More commonly, you would say 'I am returning', meaning 'right now'.

and also whether 'on this matter' or 'in this matter' is appropriate (can you help me make that distinction better?)?

'On this matter' sounds odd.

'In this matter' suggests that you are refering to something in the matter that they are considering. eg Thank you for your consideration of my role in this matter'.

You might want to consider saying 'of this matter'. This thanks them for considering the complete and entire matter. Perhaps this may be the best preposition for you to use in your example below.

With this letter, I return you the I-20 form effective for the Spring semester of 2004.

Thank you for your kind consideration on this matter.

Best wishes, Clive