Schools are cheating. As ironic as the statement is, it is, nevertheless, true the IRS puts forth. Many Universities are allegedly cheating on their taxes, claiming exemptions on non-educational businesses when there ought not be any, and the schools who are trying to evade taxes are some heavy-hitters, including Harvard, the University of Texas, and Notre Dame, just to name a few. Schools are permitted to have “unrelated business income” (think: the school cafeteria, arcades, or even the school bookstore), but, as any other business would, taxes need to be paid; the problem becomes, however, that many schools are claiming these business ventures fall into the non-taxable educational bracket.
The implications of this fraud are still being unearthed, but what taxpayers will primarily care about is the bottom line: taxpayers are being cheated. Harvard owns a hotel and charges up to $300 a night, the University of Central Florida deals in selling electronics, and even the smaller school of Lamar University advertises for Cheddars restaurant and Dairy Queen at sporting events- none of which is being taxed. With all the possible sources of revenue pouring in, it’s only astounding this fraud has not been found earlier: The law itself has been in place since 1950, but up until the past five years, no one has taken any note of it- unfortunately for competing businesses. Surrounding businesses are at a clear disadvantage; not only are the businesses alone forced to pay taxes, they may also lose clients since a nearby school can charge less for the same quality of goods.
Ultimately, up to 40 schools are being audited, and that is only to the taxpayers’ benefit. No more country clubs and university pizzerias raking in extra money- hopefully the playing field will soon be as even as the currently tax-exempt golf course owned by the University of Central Florida.
I (Mark) have a question here: Most universities and colleges are not shareholder-owned corporations. Why should they pay income tax?