Sunday, February 9, 2014
Bloomberg: Harvard Pledges Restitution for 11,000 Employees After Tax Error:
Harvard University pledged to ensure restitution for as many as 11,000 employees after two of its faculty pointed out the impact of a tax error by the school.
Harvard erroneously reported that about $20 million worth of payments for life insurance were taxable, resulting in possibly millions of dollars in overpayments for employees beginning in 2009, law professors Alvin Warren and Daniel Halperin, both of whom specialize in tax law, said Feb. 4 in a memo to staff and faculty obtained by Bloomberg.
The university, based in Cambridge, Massachusetts, said Jan. 21 that employees who bought the life insurance plan would have to apply for refunds from the IRS on the overpayments. After Halperin and Warren pointed out that the overpayments were the university’s responsibility and that some were made too long ago to dispute with the IRS, the college said it would either compensate the overbilled employees or assist them in getting refunds. ...
Before 2009, some Harvard employees paid rates for supplemental life insurance that the IRS considered to involve taxable subsidies, the law professors’ e-mail said. When the university changed the insurance rate schedule in 2009, taxes on them should have ceased, the e-mail said.
(Hat Tip: Eli C. Bortman.)