Columbus Dispatch, IRS Sees Ohio University President’s House as Taxable:
When Roderick J. McDavis became Ohio University’s president a decade ago, he moved into 29 Park Place, a 7,000-square-foot, 2 1/2-story home at the heart of OU’s campus in Athens.
The rent is free, and McDavis’ contract says he has to live in the house. Plus, it’s convenient for McDavis, administrators, faculty members and students to have him so close to the office.
So should he pay income taxes on the house as a benefit? Many Ohio universities say no. The Internal Revenue Service says yes.
An ongoing IRS audit of OU found that McDavis should pay taxes on his free residency at OU. The university’s board of trustees thought otherwise, voting last month to cover the “unexpected” cost: about $19,000 in federal, state and local taxes for this year. ...
Including his salary, bonuses and other pay, McDavis made nearly $600,000 during the 2013 fiscal year. ...
Meanwhile, several leaders of other Ohio universities with arrangements similar or identical to OU’s are still living tax-free, The Dispatch found. Ohio State University and at least five other universities own their presidents’ residences, and none asks its president to pay rent or taxes.
The tax code has three conditions that employers must meet for such an arrangement to be tax-free: Lodging must be furnished on an employer’s business premises, which some universities believe can include off-campus houses; it must be furnished for the employer’s convenience; and the employee must accept it as a condition of employment.
It’s unknown which of those conditions the IRS said McDavis was not meeting. McDavis’ contract says he must live at 29 Park Place, which is on the campus. That suggests the IRS believes that McDavis doesn’t live on campus for the university’s “convenience,” said Ted Johnson, a Columbus-based tax and litigation support partner for Parms + Company. ... “If what the IRS concluded when they audited OU is correct, you’ve got a ticking time bomb with these other universities,” Johnson said. “The IRS is aware of that, and if they’re smart, they will see this as a possible audit point.”
For more, see A Federal Income Tax Guide for College and University Presidents
(Hat Tip: Inside Higher Ed.)