Colleges as Potential Tax Targets

The Internal Revenue Service is focusing mostly on issues related to executive compensation and payment (or non-payment) of tax on unrelated business income in more than 30 reviews it is conducting of individual colleges and universities, the agency said Friday, as it released the preliminary results of its survey of 400 institutions.

The interim report issued Friday offered the first official look at the information the federal tax agency has collected from a wide-ranging questionnaire it sent to colleges in 2008 to gauge their compliance with tax laws and identify possible areas for further examination (and enforcement, of course). The IRS focused on higher education (following a similar questionnaire it sent to hospitals), the agency said, because "colleges and universities make up one of the largest nonprofit segments in terms of revenue and assets" — and that status has made it a target for members of Congress and others in the federal government at a time of ever-tightening federal budgets.

Two higher education groups, the Association of Governing Boards of Universities and Colleges and the National Association of College and University Business Officers, collected a subset of the colleges’ responses to offer a preview of the findings last fall.

The IRS’s interim report includes data for a total of 344 colleges, 177 private and 167 public. Several dozen of the original recipients of the questionnaire were excluded because they offered only two-year degrees or were not tax exempt, and 11 institutions that responded to the survey were omitted from the report because they submitted questionnaires on behalf of their entire university systems; information about them will be part of the IRS’s final report, which will be released later.

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