Monday, May 10, 2010

IRS Finds Possible Problems with How Colleges Report Business Income and Set Salaries

While many colleges might be tax-exempt on reported college enterprises such as facility rentals, bookstores, and food services, colleges are still supposed to report their profits and losses to the IRS on these services. Yet many small colleges, the IRS is finding out, have never even filed the appropriate tax forms for such activities. The IRS sent a 42-page survey to 400 private and public colleges in late 2008 asking the institutions to disclose financial details about their business ventures and executive compensation. The IRS began auditing 30 institutions of higher learning based on their responses, as well as thirteen that did not respond to the survey. The article in The Chronicle of Philanthropy website reads that the IRS is concerned with unreported business activities and questions the compensation of the most valuable university employees such as presidents and chancellors. Private colleges are supposed to follow IRS guidelines on compensation. The IRS also found that most of the institutions surveyed also are not seeking out expert advice to determine whether to report those activities.

Read the full article here.

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