AAU Weekly Wrap-up
April 29, 2016
BUDGET, APPROPRIATIONS & TAX ISSUES
SENATE FAILS TO APPROVE FY17 ENERGY AND WATER FUNDING BILL
The Senate was close to passing its FY17 Energy and Water appropriations bill this week until Senator Tom Cotton (R-AR) offered an amendment that would
prevent the United States from following through on an element of the nuclear agreement with Iran. Democrats saw the amendment as a “poison pill” rider,
and prevented further consideration of the bill.
The Senate is now in recess until May 9, so the future of the Energy and Water bill and the rest of the FY17 appropriations process remains unclear. The
House is also in recess next week.
IRS TAX GLITCH FOR FOREIGN STUDENTS AND FACULTY STILL NOT RESOLVED
The higher education community is concerned that thousands of international students and scholars have received notices from the Internal Revenue Service
(IRS) denying them tax refunds for taxes withheld for the 2014 tax year and, in some cases, assessing them additional tax bills. This has caused a great
deal of anxiety among these students and scholars.
The IRS has acknowledged problems with these refunds and tax bills, but it has not offered the reasons for the unusually large number of refund denials.
The National Association of College and University Business Officers (NACUBO) reports that “attempts by students and institutions to seek clarification
have shed little light on the rationale…Thus far, there is no resolution or clear path ahead for taxpayers…Repeated requests to the IRS seeking the
cause(s) of widespread problems go unanswered.”
NACUBO has prepared a briefing paper on the issue; Rep. Lloyd Doggett (D-TX) April 22 sent a letter to IRS
Commissioner John Koskinen requesting information about the IRS errors and an expeditious resolution of the problem.
The IRS considers grant aid in excess of tuition and mandatory fees to be taxable income, so institutions of higher education are required to withhold 14
percent of the excess in taxes for foreign students and to pay the withheld amounts directly to the IRS. This withholding is reported to students via Form
1042-S, and they can request a refund of any overpayment of taxes when they file their tax returns.
Campuses have been contacting members of their House and Senate delegations, particularly those on the tax committees, to urge the IRS to specify the cause
of the current problems and to work with institutions and service providers to resolve the problem.
The Department of Education issued a supplemental notice of proposed rulemaking ( NPRM) on March 31 to address issues raised by the higher
education community regarding the Department’s proposed regulations on the treatment of distance teacher-preparation programs.
The higher education community has identified serious problems with the March 31 supplemental NPRM and has spelled them out in joint comments to the Department, submitted on April 28.
The associations’ comments outline three broad areas of concern:
1. TEACH Grant eligibility would depend on an institution’s not being classified by any single state as low-performing or at risk of being low performing,
thus giving any state veto over TEACH eligibility for the entire country;
2. State reporting requirements are convoluted and would be burdensome for institutions; and
3. The supplemental NPRM fails to add needed clarity in other areas, such as the definition of “distance education,” which is likely to create new areas of
uncertainty for students and institutions.
The letter concludes:
“While we strongly share the Department’s goals of improving teacher preparation and ensuring that America’s educators succeed, the proposals contained in
the supplemental NPRM would undermine those aims and instead result in the introduction of significant confusion and negative unintended consequences. In
this way, the approaches identified in the supplemental NPRM mirror the broader regulatory package, and we would repeat the request made in our earlier
comments that this effort be abandoned. This is particularly relevant in light of the recent passage of the Every Student Succeeds Act, which bars the
Department from prescribing the structure of state teacher evaluation systems.”
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