Welcome to the Tax section of our webpage. 

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

educational institutions.

 

Feb. 2, 2010: IRS Shelves Cellphone Proposal, Waits for Congress to Act: by Martin Vaughan, Dow Jones Newswires. He reports that IRS Notice 2009-46 is on hold.

 

IRS INFO 2009-0247 Dated Oct. 2, 2009: Explanation of *education* below the graduate level. A course which is part of a course of study leading to a graduate level degree is not considered 'education below the graduate level,' even if the course is not taken in order to fulfill requirements for a graduate level degree, unless it is taken for credit toward a degree below the graduate level.

 

 

IRS Chief Counsel memorandum, ILM 200944027

This memo offers guidance on whether stipends paid to postdoc fellows should be treated as compensation for services rendered to the institution or as bona fide fellowship payments. Fellowship payments are not subject to income or FICA tax withholding, and the payor does not need to report the payments. In the memo, National Research Service Awards to postdocs were found to be not taxable. Non-NRSA grants analyzed in the memo were taxable, for several different reasons. These are outlined in the memo, and include, but are not limited to the following:  the postdocs not being hired until after the school obtained the research contract; fellows are assigned to projects defined by the project leader; and the fellow can be terminated for non-satisfactory performance.

 

Notice 1392: Supplemental Form W-4 Instructions for Non-Resident Aliens (December 2009)

 

Employer's Tax Guide to Fringe Benefits For 2010

 

Return Due Dates for Exempt Organizations

 

IRS Governance and Tax-Exempt Organizations-Examination Materials Includes a checklist. (December 09)

 

IRS Notice 2009-91 Withholding Wages of Non-Resident Aliens Performing Services within the US (November 2009)

This notice modifies IRS Notice 2005-76 and applies to wages paid on or after Jan. 1, 2010. The new rule requires employees to add an amount to wages before determining withholding in order to offset the standard deduction. Second, employees need to determine an additional amount of withholding from a separate tax table applicable only to NRAs. Further directions will be set forth in IRS Publication 15.

 

Employee Misclassification: Improved Coordination, Outreach and Targeting Could Better Ensure Detection and Prevention August 2009 GAO Report: GAO was asked to review the extent of misclassification.

 

Form 990 Filing Tips: Reporting Foreign Activities (schedule F)

Foreign Bank Accounts and Tax Filings
31 USC 5314(a)

US institutions and citizens that have an ownership interest in foreign bank accounts, or US citizens with signature authority over a foreign bank account have to file form TD F 90.22-1 (FBAR). The latter must report the account on an FBAR even if the foreign financial account is reported on an FBAR filed by the owner of the account (or other person that has a financial interest in the account).

 

Notice 2009-62

Regulations in this area are pending. The filing deadline for US institutions and citizens that have an ownership interest in foreign bank accounts, or US citizens with signature authority over a foreign bank account has been extended until June 30,2010 to file the form for 2008 and also for pre-2008 tax years.

Information on Donated Property for Charitable Organizations:
IRS web page providing information about filing requirements of charities that receive charitable contributions of donated property. Beginning with the 2008 tax return (filed in 2009) organizations that receive donated property will have to file Schedule M with the 990. Also on this web page there is a summary of the other reporting requirements , such as the written acknowledgment for a charitable contribution of $250 or more, the written disclosure statement for a quid pro quo contribution, Form 8282, and 8899, as well as forms for vehicle donations.

IRS Counsel memorandum dated Oct. 22, 2008 (released July 2009) titled Income and Tax Consequences and Proper Reporting of Employment -Related Judgements and Settlements. See also the McDemott, Will and Emery summary of the four step process for determining tax treatment of employment related settlement payments, i.e. is it a wage or non-wage payment.  The memorandum also includes a chart that lists for each type of payment whether it is taxable income, should be treated as wages for FICA and income tax withholding, and whether reporting is required and what form to use.

 

 

 

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.