Paul L. Caron

Thursday, April 25, 2013

IRS Releases College and University Tax Compliance Report

IRS Logo 2IR-2013-44:  IRS Releases Final Report on Tax-Exempt Colleges and Universities Compliance Project;

The IRS today released its final report summarizing audit results from the IRS’ colleges and universities study, which began in 2008. This final report describes the agency’s multi-year project on a major segment of tax-exempt organizations.   

“The audits identified some significant compliance issues at the colleges and universities examined,” said Lois Lerner, Director, Exempt Organizations division. “Because these issues may well be present elsewhere across the tax-exempt sector, all exempt organizations need to be aware of the importance of accurately reporting unrelated business income and providing appropriate executive compensation.”

The attached final report focuses on two primary areas within the examinations: reporting of unrelated business taxable income, and compensation, including, employment tax and retirement plan issues. ...

Examinations have resulted in:

  • Increases to UBTI for 90% of colleges and universities examined totaling about $90 million;
  • Over 180 changes to the amounts of UBTI reported by colleges and universities on Form 990-T; and
  • Disallowance of more than $170 million in losses and Net Operating Losses (NOLs, i.e., losses reported in one year that are used to offset profits in other years), which could amount to more than $60 million in assessed taxes. ...
Overall, the average and median base salary and total compensation for the top management official of the colleges and universities examined, both public and private, were as follows:
  • Average base salary: $448,981; median base salary, $363,943
  • Average total compensation: $561,135; median total compensation, $458,152.

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