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May 1, 2013


IRS ‘Compliance Project’ Includes Audit of University of Texas

The IRS looks for revenue wherever it can find it. In recent years, for example, the agency has becoming especially aggressive at going after what it perceives to be unreported income from offshore accounts.

Another example is worker classification audits. The IRS has done many of these in Texas, looking for employers trying to avoid payroll taxes by classifying certain workers as contractors when they are actually employees.

But foreign account and worker classification enforcement are hardly the only avenues the IRS takes in its search for tax revenue. Yet another instance of this is the agency’s recent action against colleges that the IRS suspects of underpayment of taxes on employee compensation and on businesses they own.

One of these colleges was the University of Texas in Austin. There were more than 30 other colleges involved in the IRS investigation as well. The IRS calls this type of procedure involving audits of multiple taxpayers a “compliance project.”

The IRS began looking at nonprofit universities in 2008. Some of the schools audited were public universities. Others were private nonprofit universities. So far, the agency has it has produced more than $7 million in revenue from payroll taxes, as well as fines on unpaid taxes.

A much bigger number is at stake in the IRS’s efforts to collect taxes on business income from the universities it has audited. These businesses include such venues as golf courses and recreation centers. The IRS could generate as much as $60 million through those efforts. And it has sought to clarify the tax guidelines on university-run businesses.

Please visit our page on IRS tax audits.

Source: IRS Finds College Underpay Tax in Audits That Included Harvard,” Bloomberg, MIchael McDonald, 4-25-13