Welcome to the Tax section of our webpage. 

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

educational institutions.

 

 

Mayo Clinic v. US; Regents of University of Minnesota V. US of America

15 page decision filed June 12, 2009 by 8th Circuit Court of Appeals holding that payments to medical residents do not quallify for the student FICA exemption, as medical residents are full time employees, and the exception is limited to students who are not full time employees.

 

 

Substantiating Use of Employer Provided Cell Phones IRS Notice 2009-46
This IRS notice, issued June 8, 2009 seeks comments from the public regarding proposals to simplify the substantiation procedures of an employee's business use of employer provided cell phones. Alternative suggestions are sought by Sept. 4, 2009. Three alternative measures are currently under consideration:

The Minimal Use Personal Method would allow all use to be deemed for employment if an employee can provide the employee with sufficient proof to establish use of a personal cell phone for personal purposes during work hours. Another minimal use method would be adoption of a minimal use standard, such as a number of minutes that could occur on the employer provided cell phone and be disregarded.

The Safe Harbor Substantiation Method would allow an Employer to treat a certain % of employee use as employment related, and the remaining percentage personal, with the employee paying taxes upon the latter, likely 25%. The Statistical Sampling Method would let employers use statistical sampling to determine the employee's average use of the cell-phone for personal calls.

 

Tax Preferences and College Sports: A Congressional Budget Office paper prepared May 2009.

 

A Federal Income Tax Guide for College and University Presdents:
Presented by ACE and NACUBO, updated May 2009. Topics include federal gross income, fringe benefits,

expense reimbursements, deductions, retirement plans, estate taxes and more.

 

Guidance on Payments to Clinical Research Subjects: 

There has been some confusion over the years as to whether Form 1099 reporting is required on payments made to clinical research subjects.  In 2005, an IRS e-mail response to a question posed by a taxpayer said that no reporting was required because the subjects are not in a trade or business.  This conclusion was criticized because whether Form 1099 reporting is required does not depend on whether the recipient is in a trade or business.  In 2008, the IRS clarified this position and said that, assuming the amount of the payment is $600 or more, Form 1099-MISC reporting is required and that the payment should be reported in Box 3 to avoid creating the presumption that the payments are subject to self-employment tax.  Also in 2007, the IRS issued a Program Manager Technical Assistance memorandum that seems to back away from a strict Box 3 reporting position and suggests that Box 7 reporting may be appropriate if the individual is in a trade or business.

The IRS has now resolved any lingering ambiguity on this reporting issue by clearly stating in the instructions to Form 1099-MISC that Box 3 should be used to report “[a] payment or series of payments to individuals for participating in a medical research study or studies.”   (See http://www.irs.gov/pub/irs-pdf/i1099msc.pdf).  So, the reporting rules in this area now appear to be settled – an institution need not make an independent determination as to whether a clinical research subject is engaged in a trade or business of being a research subject and can safely report all payments made to research subjects in Box 3 of Form 1099-MISC, the box used for payments made to non-independent contractors.    (text on this topic posted with permission  of Tax Attorney Bertrand M. Harding, Jr., Editor of the College and University Tax Report)

 

IRS PLR 200916033

Dated January 23, 2009: This PLR involves a tax exempt foundation that supports youth in a particular sport, and targets the disabled, minorities, inner-city youth, juniors, and women. The Foundation also maintains a scholarship program for college students who meet academic, sport, community service, and financial need requirements and are studying sport management for the particular sport at issue in an accredited program at one of 19 U.S. universities. Foundation now plans to add three new scholarship programs to assist financially needy students to study sport management and to encourage diversity in the sport. One scholarship is open to minorities only.  The IRS ruled that the new scholarship programs would not affect the organization's section 501(c)(3) status since all of the programs benefit a large and indefinite charitable class, are not targeted to pre-selected individuals, and are based on objective criteria.

IRS Notice 2009-27: Internal Revenue Service (IRS) Notice providing guidance on the COBRA premium subsidy provided under Title III Section 3001 Division B of the American Recovery and Reinvestment Act of 2009 (ARRA).

 

 

Publication 598 (Rev. March 2009) Tax on Unrelated Business Income

 

ACE has published a 501(c)(3) Due Diligence Form 990 Checklist that can be used by schools to ensure that the necessary policies and procedures to prevent compliance issues are in place. There is a list of recommended policies on this checklist, along with suggested procedures and committees.