Tax Tips for Higher Education

IRS Issues Proposed Section 4968 “Excise Tax” Basis Guidance

IRS Issues Proposed Section 4968 “Excise Tax” Basis Guidance

ISSUE: The 2017 “Tax Cuts and Jobs Act” contains a provision whereby some private colleges may have to pay a 1.4% excise tax on endowment earnings. SITUATION: Marathon Bible College (MBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and section 170(b)(1)(A)(ii). They are required to file Form 990 annually.

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Minister’s Housing Allowance Update

Minister’s Housing Allowance Update

ISSUE: The Minister’s Housing Allowance (I.R.C. Section 107(2)), was again deemed unconstitutional by a federal judge in 2017. Now, the appeals process is progressing. SITUATION: Troas Bible College (TBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). They are required to file Form 990 annually.

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Tuition Waiver for Former Employee = Taxable Income

Tuition Waiver for Former Employee = Taxable Income

ISSUE: An employee received a tuition waiver benefit as part of a severance package several years ago. Tuition waivers to employees are generally exempt from income under I.R.C. Section 117. However, in this case the benefit was income to the former employee. SITUATION: Denali Christian College (DCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). They are required to file Form 990 annually. The Accounting Team at DCC calls to ask about the treatment of a tuition waiver benefit that was provided to a laid off employee for their dependents. The employee separated from service at DCC seven years previous.

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IRS: New! Tax Exempt Organization Search

IRS: New! Tax Exempt Organization Search

ISSUE: The IRS’ venerable “Select Check” system has been replaced by “TEOS” (Tax Exempt Organization Search) a more robust product that offers something for most institutions. SITUATION: Saltwater Christian College (SCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). They are required to file Form 990 annually. SCC’s Accounting Team calls us because they’ve had the IRS’ “Select Check” bookmarked on their computers for years. SCC has a small supporting foundation that has no activity, but they like to check occasionally to make sure that their Form 990-N filings are “registered” and that the Foundation is listed as “eligible to receive tax-deductible charitable contributions” (IRS Publication 78 data).

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What about the “Token Exception?”

What about the “Token Exception?”

ISSUE: Tax-exempt organizations have a great opportunity in the fundraising arena that some institutions are not utilizing.  This is the “token exception.” SITUATION: Troas Bible College (TBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.  TBC’s Controller calls us to ask about a fundraising campaign they are conducting this summer.

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