Tax Issues in Higher Education EACUBO Fall Workshop John Harabedian Tax Director Rutgers, The State University 11/17/2015

Tax Issues in Higher Education

EACUBO Fall Workshop

John Harabedian

Tax Director

Rutgers, The State University

11/17/2015

EACUBO – November 17, 2015 2

EACUBO – November 17, 2015

Tax Topics

• IRS enforcement activities• Trade Preferences Extension Act of 2015• Tax free tuition benefits• Classification of workers• Student worker FICA exemption• Alternative investment tax reporting • ACA reporting • Lawsuit and legal settlement tax reporting • Unrelated business income tax

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IRS Enforcement Initiatives

IRS 2015/2016 Priority Guidance Plan & TE/GE Priorities• Final regulations and additional guidance on section 509(a)(3)

supporting organizations• Regulations under section 170(f)(8) regarding donee

substantiation of charitable contributions• Guidance under section 512 regarding methods of allocating

expenses relating to dual use facilities for UBIT purposes• Guidance relating to Obergefell v. Hodges, which struck down

state bans on same-sex marriages• Guidance under section 6033 relating to the reporting of

contributions on Form 990• Regulations under section 457(f) on ineligible plans, and

under section 501(c) relating to political campaigns

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IRS 2015/2016 Priority Guidance Plan & TE/GE Priorities• Guidance under section 7701 providing criteria for treating an

entity as an integral part of a state• Guidance on the definition of political subdivision under

section 103 for purposes of the tax-exempt bonds• Revenue procedure that will update Revenue Procedure 97-

13 relating to the conditions under which a management contract does not result in private business use

• Exempt Plans (EP) will focus on Large Case, multiemployer plans, and IRC 403(b)/457(b) plans

• Exempt Org’s(EO) will focus on audits of employment tax, & UBIT tax liability, and is testing worker classification statistics to identify non compliance for audit

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Audits of Higher Education Institutions:

Ohio University Audit - $ 1 million settlement:• Student FICA exemption for summer work and not enrolled• Settlement payments not reported on W-2 or 1099• Misclassified Workers - deemed employees by IRS• Fringe benefits not reported for personal use of auto,

uniforms, temporary housing rental • President house deemed taxable• Early retirement package contributions to 403(b) plan were

taxable wages

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Audits of Higher Education Institutions:

West Virginia University - employment tax audit: • Resident assistant housing- housing must be job requirement

& a condition of employment• Housing/meals deemed taxable at part time second worksite

for DC lobbyist. The tax home was deemed WVU, and travel is exempt only if worksite is deemed temporary

• Taxable Athletic clothing – Nike contract allotted $$ to employees to select WVU clothing(not deemed uniforms, and not required for work)

• Uniforms - need policy that requires work day wear, and not off duty for personal use

• President tax free housing deemed taxable

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Audits of Higher Education Institutions:• West Virginia University – IRC section 119 tax free housing to

the President was denied. basis given for finding –

1.The President does not perform a significant portion of his duties at the residence nor are the living quarters an integral part of the business property but rather located in a “secluded spot”.

2.Employee could function as President with or without the provided residence.

3.Employee does not respond to emergencies as there is University and local law enforcement to handle issues.

4.The residence was used only minimally for business functions.

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Rutgers IRS Audit: of NJ State 403(b) and 457(b) Plan Audit

IRS 403 & 457 Issues:• a. Excess pretax deferrals• b. Universal availability• c. Excess 415 contributions• d. Plan loans• e. Hardship distributions• f. Annuity contract problems• g. Ineligible plan sponsor• Also audited president and coaches contracts/ deferred

compensation agreements, and the president residence

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Recent IRS Court Ruling

• Court Dismisses Claims for Unfair Treatment Against IRS and IRS Officials

• The US District Court for the District of Columbia has dismissed most of the claims in suits brought against the IRS which alleged that applicants for tax-exempt status were treated unfairly. The plaintiffs, who were applicants for exempt status under Sections 501(c)(3) and 501(c)(4), filed civil suits against the IRS, including current and former IRS officials in their official and individual capacities. These suits alleged violations of the First and Fifth Amendments, the Administrative Procedures Act, and Section 6103 of the Internal Revenue Code. They sought declaratory and injunctive relief as well as monetary damages.

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Trade Preferences Extension Act of 2015

• On June 29, 2015, President Obama signed into law the Trade Preferences Extension Act of 2015, which increases the penalties for late or incorrectly filed information returns from $100 to $250 each, and $3 million maximum, effective for information returns filed on or after December 31, 2015.

• The law also added a special rule for certain returns of educational institutions, prohibiting the imposition of penalties under IRC Section 6721 solely by reason of failing to provide the taxpayer identification number (TIN) of an individual on Form 1098-T.

• The IRS, in reaction, decided to waive penalties for missing or incorrect individual TINs on Form 1098-T retroactively

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• The Act waives the 1098-T penalty for educational institutions for failure to provide TIN for 2011 through 2014 returns

• IRC section 6724(f) was enacted to make certification requirement permanent

• No penalty if institution certifies it has complied with standards in obtaining TIN

• 2016 1098-T filings will require a new certification of properly requesting SSN’s and unable to collect via a check box

• Act codifies taxpayer must receive 1098-T to claim tax credits or tuition and fees deduction.

• Continuing Ed/non-credit is not addressed and will be problematic if IRS denies credit for no 1098-T reporting

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To Avoid the 1098-T penalty, the new requirement includes all the “reasonable cause” criteria for certification:• Solicited TIN from student at first enrollment• Solicited TIN annually by 12/31 of year tuition billed/received • Solicitation must be written or electronic and notifies student

the law requires he/she furnish TIN for 1098-T filing• IRS form W-9S or similar form to request information • Form 1098-T was filed timely and included all required

information except student’s correct TIN.• Must attach documents to IRS penalty notice and ask for

penalty abatement

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Tax Free Tuition Benefits

IRC Section 117 - Qualified Scholarships

Excludes from gross income, qualified scholarship or fellowship amounts received by an individual:• 117(a) Must be a candidate for a degree at the institution• 117(b) Qualified Scholarship defined as amount used for

tuition and fees, and required books, supplies & equipment• 117(c) does not include amounts that are in exchange for

services as a condition or represents payments for services• 117(d) allows undergraduate tuition remission for employees,

spouses and dependents at higher education institutions

• 117(d)(5) allows exemption for graduate level tuition remission if engaged in teaching or research activities

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Tax Free Tuition Benefits

IRS Notice 87-31• IRS guidance to institutions and grantors of scholarships: • Scholarship amounts are not reportable by Institutions even if

it represents taxable income such as room, board or travel• Scholarships included in income under 117(c) for services

must be reported on Form W-2• If a portion of a scholarship is for services, a good faith

allocation must be made• The recipient is responsible for determining if a non-reportable

scholarship is taxable• It is recommended that the grantor advise the recipient that

amounts exceeding qualified tuition and related expenses is taxable

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Employer Provided Education Assistance

IRC Section 127- Educational Assistance Programs• 127 (a) Gross income exclusion for the first $5,250 of

education assistance provided to employees • Does not include assistance to spouse or dependents• 127(b) Plan must be written and cannot discriminate• Allows direct payment to institution or reimbursement to

employee for tuition, fees and books • Can have completion and grade requirements• Not required to be job related course • Allowed for undergraduate, graduate and non credit courses• Institutions may use Section 127 for graduate courses and

117 for undergraduate courses of employees

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IRC Section 132 – Working Condition Fringe Benefit:

• Allows institution to exclude from gross wages, or • Allows employee to deduct from gross income on form 1040,

education expenses incurred, if the amount would be allowable as a deduction under IRC section 162.

Education expenses allowable pursuant to Reg 1.162-5:

1. Education must maintain or improve skills required by job

2. Or, education required as condition of employment

3. Not allowed for expenses to meet minimum job skills or requirements, or for expenses that lead to qualifying for new career or trade or business.

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Institutions have 2 options for graduate level assistance or tuition remission pursuant to Section 127 and 132:

Option # 1:• Set up administrative approval procedures to document

courses that improves or maintain current job skills.• IRC 132(j)(8): amounts paid or expenses incurred by the

employer for education or training provided to the employee which are not excludable from gross income under section 127 shall be excluded from gross income under this section if (and only if) such amounts or expenses are a working condition fringe.”

• Graduate degrees are considered leading to new careers in most cases and difficult to defend

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Option #2:• Exclude under Section 127, the first $5,250 for Graduate level

courses and tax as wages amounts above $5,250.• Forces employee to deduct educational expenses, or claim

education tax credits and defend expense as deductible.• Relieves the institution of the administrative burden of

deciding which courses qualify, and denying others.• Any taxable amounts are eligible for the education deduction

or the Lifetime Learning education tax credit as deemed payment

• American Opportunity or Hope credit is only allowed for the first 4 years of higher education

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Classification of Workers

IRS publication 1779, along with the common law 20 factors, determine whether the worker must be an employee or independent contractor using 3 main themes:

1. Behavioral Controls – who has the right to control and direct the worker and the work to be done? - How the worker does the job, and when/where the work is to be done.

2. Relationship of parties – does the service provider have other clients? Do they market services or hold themselves out to the public, is there a continuing relationship with no limited time frame? Do they receive vacation, sick time, health, retirement or other employee type benefits?

3. Financial controls – is service provider reimbursed expenses, is payment by the project, hourly, or other method ?

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Classification of Workers

The State of New Jersey ABC Test - N.J.S.A. 43:21-19(i)(6)(A),(B) and (C ):

A. Control Test- service provider must be free from control or direction over the performance in the contract and in fact;

B. Course of Business or Location of Work Test- service is outside the usual course of business, or, outside the place of business of the enterprise;

C. Independent Business Test- such individual is customarily engaged in an independently established occupation or business.

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Classification of Workers-Rutgers Questionnaire

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Classification of Workers - Rutgers Questionnaire

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Professional Service Matrix

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Professional Service Matrix

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Student Worker FICA Exemption

IRC Section 3121(b)(10) - service performed at a college or university by a student enrolled and regularly attending is exempt from FICA and Medicare taxes.

IRC 3121(b)(19) exempts non resident alien student workers present in the US under F, J, M, or Q visa status until they qualify as “resident aliens” for tax purposes under the substantial presence test which is generally in year 6 for student visas.

IRS regulations under 3121focus on 2 basic principles:• The services must be “incident to” and “for the purpose of

pursuing a course of study”• The educational aspect as opposed to the service aspect

must be predominant

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• IRS Revenue Procedure 2005-11 defines standards and sets safe harbors:

• Enrolled and regularly attending – at least half time in a degree granting program determined each semester or term.

• Full time student employees are not exempt. The IRS deems the services not incident to or for the purpose of pursuing a course of study.

• The exemption applies to employment during school breaks of 5 weeks or less, as long as eligible to enroll after break

• Professional employees - require knowledge of an advanced type, requires the consistent exercise of judgement, and is predominantly intellectual and varied in character is deemed to have the service aspect predominant.

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• Teaching assistants and research assistants are specifically noted and qualify for the FICA exemption

• Medical residents and medical interns are not eligible• Post doctoral students or fellows are not eligible• Receiving vacation, sick time, health and pension benefits

suggest career or full time employee• Summer employment is taxable if not enrolled in classes • Wages are always subject to federal and state income taxes• NJ exempts student wages from NJ Disability, family leave,

and unemployment taxes• IRS has audited and penalized institutions for exempting

summer wages when not enrolled or attending classes

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Alternative Investment Tax Reporting

• University endowments increasingly turn to venture capital, private equity, investments in real estate, oil & gas, financial markets and foreign investments with tax implications.

• Common vehicle is a US partnership for tax purposes• Income from passive activity or trade or business reported on

1065 Schedule K-1 issued to the institution each year• Investments have created significant tax reporting and tax

liabilities for universities for US and state tax purposes• Schedule K-1 shows your share of unrelated business income

(UBI) that must be reported on 990-T, and also reports activity in each state the partnership generates income creating state corporate or UBIT tax liability and filing

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Alternative Investment Tax Reporting

• Schedule K-1 detail reports investments in foreign partnerships which must be reported on IRS form 8865

• Schedule K-1 detail reports investments in foreign corporations which must be reported on IRS form 926

• Schedule K-1 detail shows Reportable transaction disclosure statement required on form 8886 that show differences between book and tax positions taken that generated additional losses or deferrals

• 990-T additional forms may include forms 5471/5472 for ownership in a foreign corporation; 3468 Investment tax credits, form 1116 foreign tax credit, and form 8621 shareholder of a passive foreign investment company.

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ACA Tax Reporting

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ACA Tax Reporting

ACA added IRC sections 6055 and 6056 which impose annual employer filings to the IRS and employees showing who has access to Minimum Essential Health Coverage.• 2015 - initial year employer reporting of form 1094-C/1095-C

is required by 2/1/16 to each full time employee.• Two 30 day extensions on form 8809 are available, one is

automatic, the second must show extenuating circumstances.• “Employer shared responsibility payment” is assessed if

health coverage is not offered to employees averaging 30 hours per week, and their children.

• Penalty unless 70% of all full time employees in 2015 are offered “MESC” and 95 % thereafter under transition ESRP rules

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ACA Tax Reporting

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ACA Tax Reporting

• Full time employee-an individual who works 30 hours per week or 130 hours a month

• Minimum essential coverage – ACA defined eligible employer provided minimum health plan required coverage

• Look back measurement period –uses average hours of work for a period of time to determine full time employee per ACA

• Hours of service: there are several alternative calculation methods to determine full time employees

• Institutions must develop standard hours per class for adjuncts, teaching assistants, and PTL’s to determine hours worked under ACA.

• Federal work study hours worked are not included • 1095-C -Truncated Social Security number is allowed

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ACA Tax Reporting

• State Certifying Officer Letter March 2015 – State of NJ Institutions are on their own for ACA reporting

• State of NJ has declared that the State Health Benefit Plan exceeds minimum value required for ESRP penalty provisions

• State of NJ has also declared that State Health Benefit Plan meets affordability standards

• Each institution has to calculate affordability for each employee from W-2 wages, a rate of pay test, or a federal poverty line test

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Lawsuit and legal settlement tax reporting

Awards for back pay, lost wages or future wages are reported on W-2 and subject to all employment taxes

IRC sections 6041 and 6051 require 1099 reporting to the plaintiff for:• Compensatory damages for non physical injury which

includes emotional distress(insomnia, headaches, stomach issues etc.), defamation, and employment discrimination awards for age, race, etc.

• Punitive damages even if related to physical injury• Attorney fees even if separately stated & paid to law firm• Liquidating damages for loss or breach of contract

Not reportable are amounts for physical injuries under IRC 104

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Lawsuit and legal settlement tax reporting

IRC sections 6045 require 1099 reporting for Attorney fees • box 7 - for trade or business legal services • box 14 - for gross proceeds to attorney as long as attorney is

named a sole or joint payee( does not include “in care of”.

Example - separate checks taxable award: • 1 check to claimant $200k, 1 check to attorney $100k• 1099 to claimant for $300, 1099 to attorney for $100k

Example -1 check $300k to joint payees (claimant and attorney)• 1099 to claimant for $300k, 1099 to attorney for $300k

Example – multiple attorney payee’s• 1099 to attorney who check is delivered to, and they issue

1099 to other attorney’s paid

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Unrelated Business Income - UBIT

• Tax Exempt Organizations–Gov’t entities and 501(c)(3) entities are not subject to corporate income tax on revenues generated through activities that are functionally tied to the mission or exempt purpose of the organization.

• IRC section 511 imposes Unrelated Business Income Tax on all tax exempt organizations including state colleges and universities.

• Unrelated Business Income – revenue from regularly carried on business activities which are not related to the mission or exempt function of the organization

• Direct and indirect expenses for each unrelated activity are allowed to be deducted.

• IRS form 990-T-tax return to report such unrelated activity• 40


UBIT Tax Rates

• The aggregate unrelated business taxable income (UBTI) is taxed at US Corporate rates.

• The tax rates: • $0 - $50k 15%• $50k - $75k 25%• $75k – 100k 34%• $100k – 335k 39%• $335 – 10 mil 34%

• NOL carryforward(20 years) and carryback( 2 years)• $1,000 standard deduction allowed

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Unrelated business Income Test

IRC 512 Unrelated business taxable income (UBTI) means gross income derived from any underlying activity which demonstrate all 3 of the following characteristics:

1) the activity is a trade or business

2) the activity is regularly carried on

3) the activity is not substantially related

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• Trade or Business Requirement

• Production of income from the sale of goods or services• Genuine intent to generate a real economic profit.• The IRS will challenge activities that continually produce

losses and remove from 990-T• Must bifurcate unrelated part of activity from exempt part

a) Sales of pharmacy supplies by hospital to public are UBI and sales to hospital and patients are related to exempt purpose (reg 1.513-1(b))

b) activity of selling advertising and publishing in a tax exempt periodical is UBI from a trade or business (American college of Physicians vs United States, 106 S.Ct. 1591(1986)

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Trade or Business - Profit Motive Factors

• the manner in which the taxpayer carried on the activity,• the expertise of the taxpayer or his or her advisers,• the time and effort expended by the taxpayer• the success of the taxpayer in carrying on other similar or

dissimilar activities,• the taxpayer’s history of income or loss with respect to the

activity,• the amount of occasional profits, if any, which are earned,• the financial status of the taxpayer, and• elements of personal pleasure or recreation which could be

deemed a hobby

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• Regularly Carried On Requirement

• Frequency of the activity• Continuity of the activity • Is the activity conducted in a manner that is consistent or

comparable to commercial, taxable organizations carrying on similar activities

a) a once a year plant sale is not regularly carried on

b) operating a food stand for 2 weeks at a state fair is not a trade or business

c) conducting a year round business 1 day a week would be the conduct of a trade or business

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• Substantially Related Requirement• A substantial causal relationship to the exempt purpose or

fulfilling the mission of the organization• If motivated merely for the production of income it is UBI even

if all the revenue is used for an exempt purpose• Does the activity contribute importantly to the exercise of the

educational or charitable function:

a) performing arts school students present play charging admission which contribute importantly to exempt mission

b) travel tours with educational/ charitable content or agenda is related to exempt purpose (Rev Rul 70-534)

c) Art museum sales of art reproductions is related (Rev Rul 73-104)

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Convenience Exception

• IRC section 513(a) : “convenience exception” exempts a trade or business primarily for the benefit of members, students, patients or employees such as:

• Housing of students• Feeding of Students• Convenience store and bookstore sales• Laundry services for students• Recreational activities• Sale of University logo clothing, cups, jewelry etc.

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Exemptions from UBI

• Revenues specifically exempt under IRC 512(b):• Investment income: Interest, dividends, capital gains, etc.• All gains/losses from the sale of property• Royalties even if measured by production or gross income • Rents from real property as long as no more than incidental

services are provided• Rents from personal property must be included with leased

real property if 10% or less than total rent• Basic or fundamental research conducted • Research cannot be for commercial product testing or service

contracts simply performing tasks for a fee• Trade or business where all work is by volunteer labor.

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Examples of Related Activities

• Student run newspapers including advertising revenue (reg 1.153-1)

• Sale of related educational products (PLR 8442092)• NCAA athletics and sporting events including Bowl games,

and stadium concession sales• Golf course use by faculty, staff or students • Bookstore sales that further the intellectual life of the campus

community(ex: computers, clothes, candy, cosmetics, cd’s, novelty items, cards, food and tv’s.

• Fundamental or basic research• Ag school sale of milk and dairy, unless further production of

ice cream/pastries. (Reg 1.513-1(d))

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Sports Camps- Coach Operated

Coaches operating summer athletic camps either personally or through a company is unrelated business income as a trade or business Rev RUL 76-402;

Coach collects all revenues and pays school for:

1. rent for dorm rooms, pools, courts or fields

2. Bedding/linens, laundry, parking, lifeguards, referees, etc.

3. All food services drinks and snacks • Does not meet the IRC 512(b)(3) rental exception for

providing more than incidental services • All income to institution is unrelated income• Deductible expenses include allocated staff salaries, food,

utilities, & depreciation

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Sports Camps – University Operated

University operates summer camps utilizing university coaches and staff.

University collects all revenues and pays all expenses

University pays coaches salary or camp profits through payroll. (PLR 8151005), and Rev Rul 76-402. • Fields & dorm rental income for athletic camps is deemed a

related activity, and considered youth education Rev Rul 76-33

• Meals provided on above facts are not UBI based on convenience exception and educational mission

• Parking and other services provided are related to the educational mission

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Examples of Unrelated Activities

• Sale of Advertising • Professional entertainment events • Facility rentals to external groups • Memberships to the public• Catering and conferences for external groups • Weddings on campus• Golf course use by public and alumni• Medical lab testing sales • Sale of printing services• Antenna tower rental of space• Rental of parking spaces to public• Product testing or Clinical trials

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Examples of Unrelated Activities

• Computer time sold to an outside company• Sale of mailing lists or other data to commercial entities• Hotel room sales to the general public and alumni• Fitness center sells memberships to the general public• Affinity credit cards when marketing services provided• A hyperlink from web site to a sponsor’s web site where an

endorsement appears for the sponsor’s product.• Intellectual property where substantial services are provided

in connection with the activity • travel tour programs that are not authentic educational

activities (i.e. sightseeing, recreational, social, cruise, etc.)

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Advertising

• Advertising is defined as any message broadcast, transmitted, or distributed that markets a trade/business or product and includes qualitative or comparative language, price/value savings, endorsement of a product, or any inducement to buy goods or services

• TV, radio and website advertising is UBI• Advertising revenue generated in periodicals is UBI by

exploiting the exempt activity through the circulation and readership base

• Advertising does not include a hot link to a website• Advertising can be classified as either qualified sponsorship

or qualified Acknowledgement which are not UBI

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Qualified Sponsorship

• A qualified sponsorship payment is any payment made by any person (“sponsor”) engaged in a trade or business with respect to which there is no arrangement or expectation that such person will receive any “substantial return benefit” from the tax-exempt organization.

• A qualified sponsorship payment does not include any payment contingent upon attendance level, broadcast ratings, or other factors indicating the degree of public exposure to one or more events

• Logos or slogans that are an established part of a sponsor’s identity are not considered to contain qualitative or comparative descriptions

• Exclusive sponsorship arrangements for an event

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Qualified Acknowledgements

• Payment for the use of the name or logo or product of a trade or business:

• Cannot include comparative or qualitative language• Must be value neutral and not promote the product or

service.• Qualified acknowledgments include signs, logos, product

displays, slogans on signs, or banner on website.• Can provide telephone #, internet address, and business

locations • No endorsement language • Links or banners ads to website on home page as long as no

advertising inducement to buy endorsement of products •

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Substantial Return Benefit

A substantial return benefit is any benefit received by the sponsor other than (1) “use or acknowledgement” of the name, logo, or product-lines of the sponsor’s trade or business, or (2) any goods or services that have an insubstantial value.

Benefits greater than 2% of the sponsorship payment is deemed a substantial return benefit

Benefits with a minimal fair market value are considered disregarded benefits

Only the amount of the sponsorship payment exceeding the fair market value of the substantial return benefit is a qualified sponsorship payment

Failure to determine a good faith valuation, the IRS can make the valuation.

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Substantial Return Benefit

• Examples of benefits that may be provided to a sponsor that are subject to the 2% threshold include:

• (a) Goods, facilities, services, or other privileges (e.g., complimentary tickets and parking, receptions and dinners for donors, etc.);

• (b) Exclusive or nonexclusive rights to use an intangible asset (such as a trademark, patent, logo, or designation) of the tax-exempt organization;

• (c) Advertisements; and • (d) Exclusive provider arrangements.• Both royalty and sponsorship agreements often may be

structured to avoid UBTI implications.

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Royalty Payments

• Possibly can structure as royalty under IRC 512(b)(2)• Royalty is a payment for the use of a right, name or logo

where only incidental services are rendered• Must be involved passively and not involved in sale or

marketing as a trade/business, by providing employee help • The less an organization does the more likely income is to be

characterized as royalty income• Evidence of royalty relationship:• – Payment relates to use of a valuable right• – Organization's activities are generally limited to those

necessary to protect its reputation such as review use of logo for quality and style and limit circumstances

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Private Use Issue

• Private business use - If the unrelated activity is operated in a tax exempt bond financed facility

• 10 % private use limit on bond proceeds(5% for privates) of each tax exempt bond issue

• Should monitor building uses to insure not to exceed tax limits for leases, rentals, UBIT or research activities

• The tax exempt bond could lose its tax exempt status and become taxable

• IRS rules allow Qualified management contracts to avoid private use

• Example of private use: food vendors in student centers who lease space

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Naming Rights

IRS deems Naming Rights payments as UBI when the • Corporate sponsor gets advertising or other substantial return

benefits

IRS deems Naming Rights payments as Private use if:• Corporate sponsor gets input or control of use of facility in a

tax exempt debt financed facility

Naming a building from a donor or charitable donation does not create UBI or private use as long as no return benefits or control or use of building.

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Deductions and Cost Allocations

• Activity direct and indirect costs are allowable deductions• Compensation allocations should be based on a % of time

spent on the unrelated activity• Facility costs such as rent, deprec. insurance, maintenance

and utilities should be based upon sq footage and time used• Important to substantiate and document consistent methods• UBIT audit should have documentation of each issue and

legal justification included for each activity • IRS to issue UBIT cost allocations rules finally

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Questions ?

Contact information:

John Harabedian, Tax Director

Rutgers, The State University

848-445-2054, [email protected]

http://uco.rutgers.edu/tax-services

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Documents

Tax Issues in Higher Education EACUBO Fall Workshop John Harabedian Tax Director Rutgers, The State University 11/17/2015