Responsibilties of the Controller
The IRS will look at the type of bond issued for the university's benefit, and whether the funds are being used for exempt purpose or private activity. The general rule is that if a bond financed facility is used by an exempt organization for purposes not related to its exempt purpose, the use is treated as impermissible private use. If the use were to be found to be a private use, the bonds used to finance the facility might become taxable. The Controller is responsible for filing the 990, and with respect to bond issues, filling out Schedule K, Supplemental Information on Tax Exempt Bonds. (See the 2009 Instructions for Schedule K)
The Controller must also file every five years, with the IRS, the Arbitrage Rebate, Form 8038-T. This form is next due on ____.
Form 990 and Public Disclosure Requirements
Form 990 is an annual information return required to be filed with the IRS by most organizations exempt from income tax under IRC section 501(a). The Taxpayer Bill of Rights requires public disclosure of certain tax documents filed by tax-exempt organizations. In addition, the Pension Protection Act of 2006 requires the public disclosure of Form 990-T by 501(c)(3) organizations. Form 990-T is used to report unrelated business income tax.
Exempt organizations who do not fall under a statutory exception must file an annual return with the Internal Revenue Service. The return must be filed on or before the 15th day of the fifth calendar month following the close of the institution's fiscal year. As the fiscal year at CUA ends on April 30th, the return is due Sept. 15th of each year. There is also an automatic 90 day extension (till Dec. 15th) which CUA always takes.
The Controller is responsible for ensuring that the Form 990 is open for public inspection upon request as specified on the above linked web page.
Filing the eZ Audit with the US Dept of Education. This form is filed on January 31st, annually.
Intellectual Propery Donations: American Jobs Creation Act of 2004
Under a provision of the American Jobs Creation Act of 2004, for contributions of patents and certain other intellectual property made to a 501(c)(3) after June 3, 2004 the taxpayer's initial contribution deduction is limited to the lesser of the donor's basis in the contributed property or the FMV of the property. The donor of intellectual property will be able to claim a second deduction related to the amount of money the charitable organization earned from the property during a certain time period after the donation. The University, as donee, must file 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. See the page linked above for more information. The Controller is responsible for filing any necessary returns under this section. The Genaral Counsel and the Director of Planned Giving are to let the controller know about gifts of this nature.
This law amended the housing allowance exclusion of Section 107 of the tax code to clarify that the parsonage allowance is limited to the fair rental value of the clergy member's home. This provision is effective for tax years beginning after 2001.
It should be noted that the housing allowance exclusion is limited to the least of three amounts:
- The rental (housing) allowance declared by the clergyperson's church for the year in question.
- The actual expenses of the clergyperson to provide a home in the year in question.
- The fair rental value of the clergyperson's home, including furnishings and appurtenances (such as a garage), plus the cost of utilities for the year in question.
The Controller has general oversight of this provision.
Unrelated Business Income Tax
26 U.S.C. § 511(a)(2); 26 C.F.R. §§ 1.511-1 to 1.513-4
Income from an activity that is a trade or business, regularly carried on, and not substantially related to the conduct of the institution's educational or scientific research purposes will be considered unrelated business income and is taxable. The IRS has opined that income derived by a college or university from fees received by alumni or the general public is unrelated business income. Those items sold by the university to students, faculty and staff that are required or otherwise necessary for courses of instruction or fall under the "convenience exception" will not constitute unrelated business income. With the exception of items that have the university logo affixed, the IRS takes the position that non-educational items with a useful life of more than one year are subject to the unrelated business income tax (UBIT). The IRS holds that an institution must have an accounting system in place to deal with sales that are subject to UBIT and those that are not subject to UBIT.
Use of university facilities in unrelated activities will be subject to UBIT. Mailing list income is not subject to UBIT if the list is sold or exchanged to other exempt organizations. A corporate sponsorship issue arises when a company makes a gift to the school and in return receives certain publicity and exposure beyond a mere acknowledgment of the payment. The IRS will closely examine the relationship between the university and any related entity that has potentially unrelated business activities.
The Controller has general oversight of UBIT, and questions on UBIT are directed to either the Controller or the Office of General Counsel.
IRS Good Governance
The IRS does not *require* that 501(c)(3) organizations have a conflict of interest policy, but commencing with the forms filed for Tax Year 2008, the IRS will be asking charities about their management and governance practices. The draft form dated December 2007 includes the following questions:
Does the organization have a written conflict of interest policy?
Does the organization have a written whistleblower policy?
- Does the organization have a written document retention and destruction policy?
The Controller is responsible for ensuring that the necessary policies are in place and kept current. The Associate General Counsel for Policy and Compliance can assist as needed.
OMB Circular A-133
Audits of Institutions of Higher Education and Other Non-Profit Institutions. This circular sets forth the audit standards for colleges and universities. The Controller works with the Director of Grants and Contracts with the outside auditors on the A-133 audit. The audit is filed with the Federal Data Clearinghouse by January 31st of each year.
OMB Circular A-110
OMB Circular A-110 establishes uniform administrative requirements for federal grants and agreements awarded to institutions of higher education, hospitals, and other non-profit organizations. Federal awarding agencies may not impose additional or inconsistent requirements, except as provided. Records must be kept for three years from the date of submission of the final expenditure report. See the Chart on the OMB page for codification of grant requirements by Department.
The Controller has oversight of the work of the Director of Grants and contracts in complying with these rules.
OMB Circular A-21
Cost Principles for Educational Institutions
Establishes cost accounting principles and specifies the allowability of costs. The Controller and the Director of Grants and Contracts make sure all costs are allowable.
DC, MD and VA taxes
Filing Maryland personal property tax returns when due.
Filing Washington, D.C. personal property tax returns.
Filing Corporate and Franchise Tax with DC by July 15th of each year.
Paying real estate property taxes for off-campus property.
Paying sales taxes in Virginia.
Paying sales tax in Maryland.
Paying sales tax in Washington, D.C.
Paying sales tax in Pennsylvania.
|Private Use of University Facilities|
links checked and updated 07/28/10 TOL