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We mentioned last week that the U.S. Department of Education has a COVID-19 webpage.  They’ve added a timely FAQ resource.

 

SITUATION

Marathon Bible College (MBC) 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.

MBC has gone on-line for the remainder of the Spring 2020 term.  Students have left campus and many, many changes have taken place.  They were one of the schools who embraced “enterprise activities” a few years ago and have several student employees who receive Federal Work Study (FWS) funds.  Those students are now not working at their FWS jobs.

The MBC Accounting Team called us to ask about what needed to be done about the Federal Work Study students.  Could MBC still pay them even though they’d gone home, were taking classes on-line, and not working at their jobs?

We answered that it depends upon whether MBC meets the conditions set forth by the ED.  Generally, as long as the institution continues to pay its essential faculty and/or staff and continues to meet its institutional wage share requirement for the FWS program, it may pay students FWS funds for hours the students were scheduled to work, but could not work as a result of the COVID-19 outbreak.  Students should be paid the wage rate that they would have been paid if they were able to work the scheduled hours.  MBC must document the number of scheduled hours a student should be paid prior to paying the student. In addition, they should also document in the student’s file any actions that were taken regarding payment of Federal Work Study funds for scheduled hours that were not worked by the student.

The ED has issued, “Guidance for interruptions of study related to Coronavirus (COVID-19,” which was updated March 20, 2020, that contains a plethora of information for higher education institutions.  That resource may be found on the Department of Education’s Coronavirus website.

 

RULES

From Department of Education’s “Frequently Asked Questions Related to COVID-19”:

Our institution is not closed, but we have suspended classes on campus and moved them to a distance education format. May we pay Federal Work Study (FWS) wages to students who are unable to work because they have been impacted by COVID-19?

Yes. The FWS guidance in the Electronic Announcement dated March 5, 2020, applies when the student is unable to work because the school made the decision to close or to move to online/distance education classes and the institution meets the conditions described below.

If an FWS student is unable to work his/her scheduled hours because of COVID-19 disruptions (school closures, employer closures, student quarantined, etc.), the school may pay the student for any scheduled hours or allow the student to work by another means (on-line, remote, telecommute, etc.). Students should be paid the wage rate that they would have been paid if they were able to work the scheduled hours.

In this circumstance, when a school pays the student for the hours the student was scheduled to work, but did not work, the school is not required to submit any documentation to the Department. However, the school must document the number of scheduled hours a student should be paid prior to paying the student. Schools should also document in the student’s file any actions that were taken regarding payment of FWS funds for scheduled hours that were not worked by the student.

The guidance in the March 5, 2020 Electronic Announcement indicates that we can pay FWS funds to students who were unable to work as a result of the COVID-19 outbreak if we continuing to pay our other employees, including faculty and staff. We have student workers who do not receive FWS that will not work as a result of the outbreak. We also have certain other employees who will not be paid even though our faculty continue to teach classes. Does this mean that we cannot pay our FWS students who cannot work because of the COVID-19 outbreak?

No. As long as the institution continues to pay its essential faculty and/or staff and continues to meet its institutional wage share requirement for the FWS program, it may pay students FWS funds for hours the students were scheduled to work, but could not work as a result of the COVID-19 outbreak. The institution is not required to continue to pay all employees who had been working prior to the outbreak if it has discontinued certain operations as a result of COVID-19.

Institutions that have received a waiver of the institutional wage share requirements under 34 CFR 675.26(d) continue to be exempt from the wage share requirements for purposes of the guidance in the March 5 Electronic Announcement.

 

BOTTOM LINE

  • The Coronavirus (COVID-19) is causing disruption for all of us.
  • The U.S. Department of Education has issued a set of FAQs that can be found on their Coronavirus page at:  https://ifap.ed.gov/sites/default/files/attachments/2020-03/COVID-19FAQs.docx
  • For Federal Work Study students, your school must must document the number of scheduled hours a student should be paid prior to paying the student.
  • The ED has a lot of guidance on how to handle issues with various Title IV programs on their Coronavirus page.

 

Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply. 

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