Senator proposes new tax form for universities

Colleges and universities may need to use a new tax form as part of a broad examination of how universities manage their money.

Senator Charles Grassley (R-IA) has asked the IRS and Treasury officials to create a form specifically for colleges and universities rather than using Form 990 which is designed for all tax-exempt organizations.

The new form would require information about student populations, finances, executive compensation, and endowments. "Given the impressive investment returns of college endowment funds, even in years of economic downturn and as tuition has steadily increased, Congress would be remiss if it didn't question what benefits tax-exempt colleges and universities provide in return for all of the federal benefits they receive," Grassley said in a September 8 congressional roundtable. The discussion was called, "Maximizing the Use of Endowment Funds and Making Higher Education More Affordable."

No decision will be made until the IRS examines the results of a questionnaire, which will be sent to 400 colleges and universities.

Tony Pals, spokesman for the National Association for Independent Colleges and Universities, told The Daily Pennsylvanian that universities already provide government with enough financial information.

"It's a little ironic that an unintended consequence of additional reporting requirements would be added costs incurred by institutions, which only puts further pressure on tuition increases," Pals said.

Jon Forman, the Alfred P. Murrah Professor of Law at the University of Oklahoma, however, said, "Let the sun shine in."

Some additional information will be forthcoming without a new form because Form 990 has been revamped for the first time since 1979. More information about governance, executive compensation, and relationships with insiders and other organizations will be required, the Oklahoma City Journal Record reported. For example, the new Form 990 requires all organizations to disclose the names and compensation of every person who receives more than $150,000 a year.

Forman wrote in a Journal Record opinion piece: "Congressional scrutiny and the new Form 990 are slowly bringing tax-exempt operations out into the open – and bringing reforms. Harvard, for example, which has a $35 billion endowment, was recently shamed into providing more financial aid to offset its $32,557-a-year tuition, and private hospitals will probably need to spend more on charity care (and less on salaries) if they want to keep their tax exemptions. Let the sun shine in."

You may like these other stories...

Event Date: August 21, 2014, 2 pm ETMeet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs.  Kristen Rampe will share how knowing the keys to structuring...
Event Date: August 20, 2014, 2:30 pm ETIn this session we'll review best practices for how to generate interest in your firm’s services. Topics include:Web Based Marketing StrategiesAppointment SettingNetworking...
Recently, there has been a lot of buzz about the future of continuing professional education (CPE). The American Institute of CPAs (AICPA) created a task force on the Future of Learning with an accompanying fancy website. In...

Upcoming CPE Webinars

Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.
Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.