Welcome to the Tax section of our webpage. 

This front page will reflect our most current information on tax law affecting

educational institutions.

Revenue Ruling 2008-34
Section 108: Income from Discharge of Indebtedness and Student Loans

The terms of a law school's loan repayment assistance program which assists students who engage in public service met the requirements of 26 USC § 108 (f)(1), thus making forgiveness of the loan non-taxable to the student. In the fact situation that was discussed in the revenue ruling, after the student graduates from law school he/she signs a Loan Repayment Assistance Program (LRAP) promissory note and accepts the terms of the law school loan program, which provides the indebtedness will be forgiven if the student works for a minimum period of time in a qualifying related public service position. See 26 USC § 108(f)(2)(D).  Pursuant to the Taxpayer Relief Act of 1997, the term "student loan" was expanded to include loans made by educational organizations if the loans were pursuant to a program of the educational organization which is designed to encourage students to serve in occupations with unmet needs or in areas with unmet needs, and the services are for or under the direction of a governmental unit or an orgainzation described under 501(c)(3) that is exempt from tax under 501(a) of the code. All of the positions listed in the LRAP met these conditions.   

IRS Notice 2008-49 (May 19, 2008)
Public Inspection of Form 990-T

This notice modifies Notice 2007-45 and provides additional interim guidance on making Form 990-T available for public inspection. The disclosure requirement, whihc requires the Form 990-T filed by the institution to be open to public inspection and copying for the three year period beginning on the last day prescribed for filing the 990-T only applies to those schedules, attachments and supporting documents that specifically relate to the imposition of tax via IRC 511 (UBIT).

 

NACUANOTE: Retirement Plans: Compliance with the New 403(b) Regulations

On July 26, 2007, the IRS issued the first comprehensive regulations governing 403(b) plans in over forty-three years. The new 403(b) regulations generally are effective January 1, 2009. Key changes/clarifications include a plan document requirement, non-discrimination rules, post-retirement contributions, in-service withdrawals, transfers and exchanges, timely remittance, plan terminiation, and controlled group rules.

 

IRS Political Activity Compliance Initiative (2008 Election)
A collection of letters, news releases and other educational and compliance materials.

 

Final Rule: Information Returns by Donees Relating to Qualified Intellectual Property Contributions, 73 Fed. Reg. 18709, April 7, 2008. Effective 4/7/08
This document contains final regulations that provide guidance for filing information returns by donees relating to qualified intellectual property contributions. These final regulations reflect changes to the law made in 2004. The regulations affect donees receiving net income from qualified intellectual property contributions made after June 3, 2004. This text contains income tax regulations required under the American Jobs Creation Act of 2004. Section 882(c)(1) of that Act amended section 6050L of the tax code to require donees to make an annual information return that reports qualified donee income for the taxable year if the donor filed timely notice of the donor's intent to treat a charitable contribution as a qualified intellectual property contribution and net income was produced by the donation and the income was received or accrued during a 10 year period beginning on the date of contribution.The donee is  absolved of the need to file a return after the expiration of the legal life of the property.

 

The information required to be reported on the return is as follows:

 

    (1) The name, address, taxable year, and employer identification number of the donee making the information return;
    (2) The name, address, and taxpayer identification number of the donor;
    (3) A description of the qualified intellectual property in sufficient detail to identify the qualified intellectual property received by such donee;
    (4) The date of the contribution to the donee;
    (5) The amount of net income of the donee for the taxable year that is properly allocable to the qualified intellectual property (determined without regard to paragraph (10)(B) of section 170(m) and
with the modifications described in paragraphs (5) and (6) of such section); and
    (6) Such other information as may be specified by the form or its instructions.

A copy of the return must be furnished to the donor of the property.

 

A donee is expected to file Form 8899 (Notice of Income from Donated Intellectual Property )by the last day of the first full month following the close of the donee's taxable year to which the net income from the contribution is properly allocable.

 

Section 682: Treatment of Intellectual Property

 

Withholding of Income tax on Remuneration Paid to Employees working outside U.S.
April 4, 2008 ILM 200814010 Chief Counsel Advice from IRS: Remuneration for services paid to the employee who is a United States citizen are wages for income tax withholding purposes to the extent that they exceed the amount of the exclusion that the employee is entitled to under section 911 and are not subject to withholding under the laws of a foreign country.

Regents of the University of Minnesota v. U.S. (U.S. Dist. Ct. Minnesota, April 1, 2008) Plaintiff Regents of the University of Minnesota sued the Defendant United States of America seeking a refund of the FICA taxes withheld and paid on medical residents' stipends during the second quarter of 2005. The amount of the University's claim is $1,094,803.92, plus interest. The court granted the Univesity's motion for Summary Judgement.  The court held medical residents at the University of Minnesota are eligible for the section 3121(b)(10) student FICA exception and that the IRS regulations holding to the contrary are invalid. 

Final Rule: Standards for Recognition of Tax-Exempt Status if Private Benefit Exists or if an Applicable Tax-Exempt Organization Has Engaged in Excess Benefit Transaction(s),73 Fed. Reg. 16519 March 28, 2008 

This rule adds examples to existing regulations illustrating the principle that in order to qualify for tax exempt status, an organization must serve a public rather than private interest. This document also contains provisions that clarify the relationship between the substantive requirements for tax exemption under section 501(c)(3) and the imposition of section 4958 excise taxes on excess benefit transactions.

 

April 7, 2008 IRS Posting: Form 990 for Tax Year 2008 (Forms, Draft Instructions and Highlights)
The new form will apply to fiscal/tax years that begin in 2008. Sean Scally (Tax Counsel for Vanderbilt) notes that compensation reporting (which used to be option on either a calendar or a fiscal year basis) must now be on a calendar year basis... no option available. He also notes to see the expanded definition of a "key employee" for compensation/benefits reporting purposes.

 

Governance and Related Topics-501(c)(3) Organizations
Recommeded policies and practices from the IRS, posted Feb. 4, 2008. Covers mission, organizational documents, governing body, governance and management policies, financial statements and 990 Reporting, and transparency and accountability.

New Form 990 Redesigned for Tax Year 2008
This is the IRS web page with a link to the new Form 990, Return of Organizations Exempt from Income Tax. The web page includes an overview of the redesign, as well as a discussion draft and background paper.  This is the form filed by many public charities and other exempt organizations. The IRS will require this Form for tax returns filed in 2009. The IRS plans to release the related instructions in early 2008, and is working with the nonprofit sector on the instructions. There is a graduated transition period for smaller organizations. See the Press Release (on the linked page) for more on this transition period.