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AAU, Associations Submit Comments on Excise Tax to Endowment Tax Income

AAU joined NACUBO, ACE, and eight other higher education organizations on a letter to IRS Deputy Associate Chief Counsel Janine Cook and U.S. Department of Treasury Office of Tax Policy Attorney-Advisor Elinor Ramey to express strong opposition to and offer comments on the notice of proposed rulemaking on implementation of the endowment tax, a 1.4 percent excise tax on income from certain private university endowments and other investments. The proposed rule seeks to implement the provision included in the 2017 Tax Cuts and Jobs Act.

In the letter, the organizations recommend the following: “Considerations for attempting to treat institutions of higher education identically, rather than similarly, to private foundations for purposes of implementing section 4968; The exclusion of income derived from institutional student loans in the calculation of [net investment income]; The exclusion of housing payments from “rents” treated as NII; Removal of the proposed safe harbor setting 1.5 percent of non-charitable use assets as a benchmark for cash that an institution may exclude from its non-charitable use assets in determining whether it is subject to tax; and Removal of the proposals requiring colleges to gather property basis information from donors of gifts of appreciated property as well as from partnerships.”


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