NACUBO recently submitted a comment letter, endorsed by 10 other higher education associations, on the July 3 Notice of Proposed Rulemaking that interprets the new 1.4 percent excise tax on the investment income of certain private institutions enacted as part of the Tax Cuts and Jobs Act of 2017.
This so-called endowment excise tax is imposed on private institutions with at least 500 tuition-paying students, more than 50 percent of whom are located in the United States, during the preceding taxable year and the aggregate fair market value of the assets of at least $500,000 per student.
In the letter, NACUBO continued voicing its opposition to the tax, arguing it will only result in diminished charitable resources available for student financial aid, research, academic support, and public service. The proposed regulations heavily rely—without nuance—on the application of existing rules governing private foundations for the definition of exempt assets and for determining the amount of cash on hand that the institution may exclude from income in calculating the tax, for example.
Final regulations are not expected until late 2022 at the earliest. NACUBO will continue to closely track and report on the publication of the final rules.
Advocacy: NACUBO on Capitol Hill
In collaboration with other higher education and nonprofit stakeholders, NACUBO continues to meet with congressional staff and members, urging support for a number of tax policies, including repeal of the transportation fringe benefit tax and repeal of the net investment income tax.
Business officers are encouraged to continue to work with their government relations colleagues on campus in communicating their institutions’ needs to their representatives in Washington. NACUBO has developed a primer on college and university tax issues, available on the NACUBO website, to help campus leaders understand and communicate their institutions’ concerns to members of Congress and their staff. To download a copy of the primer, visit www.nacubo.org/topics/tax.
Take Action: Park the Parking Tax
The Tax Cuts and Jobs Act of 2017 created a new tax on the transportation and parking benefits provided by nonprofit employers to employees. All nonprofit organizations, including colleges and universities, are now taxed at the corporate tax rate (21 percent), on the value of transportation and parking benefits provided to employees—under Section 512(a)(7) of the tax code.
Both Republican and Democratic legislators have introduced several bills that would repeal this ill-conceived tax on nonprofits. NACUBO is optimistic that this bipartisan support will lead to the inclusion of a repeal provision in the must-pass spending legislation that Congress will likely take up in December.
In light of the significant economic impact this tax has on colleges and universities around the country, NACUBO is committed to engaging in proactive advocacy to support its repeal. With this in mind, NACUBO has launched an interactive advocacy campaign that makes it easy for individuals and organizations to connect with their lawmakers via e-mail or Twitter and express support for repeal of the tax.
Simply text "UBIT" to 52886 to receive a link to engage with the campaign on your phone. You can also use this link to access the campaign on your desktop or mobile device. If you or your colleagues are preparing to meet with one of your senators or representatives, NACUBO has also developed talking points on the parking tax to help with your outreach, available at www.nacubo.org/advocacy/issues.
NACUBO CONTACT Mary Bachinger, director, tax policy
Monitoring Post-9/11 GI Bill Developments
In late 2018, the Department of Veterans Affairs (VA) experienced technical issues while processing Monthly Housing Allowances (MHAs) for student veterans under the Harry W. Colmery Veterans Educational Assistance Act of 2017 (also known as the Forever GI Bill), which resulted in a backlog of more than 70,000 claims. After applying a temporary fix at the time, the VA has since made improvements to its technology systems that will allow student veterans to receive the correct amount for their housing for the spring 2022 term.
Beginning Dec. 1, 2019, MHA payments will be made in accordance with changes dictated by the Forever GI Bill. A student’s MHA rate will now be based on the location of the campus where he or she attends the majority of classes. For student veterans who started using the Post-9/11 GI Bill after Jan. 1, 2018, MHA rates will be aligned with the Department of Defense’s Basic Allowance for Housing. Student veterans who began using the benefit before Jan. 1, 2018, will be grandfathered in to the slightly higher VA rate that was eliminated by the change in the Forever GI Bill.
Through meetings on Capitol Hill, interactions with VA staff, and conversations with other associations and student veteran groups, NACUBO continues to advocate for its members on GI Bill issues, including addressing the way the VA looks at a student taking modular courses and whether or not that student is considered full time. By bringing the credible perspective of the business office to these discussions, NACUBO is striving to ensure that veterans’ benefits are received and processed in a timely and accurate manner.
For more information about benefits for student veterans, visit benefits.va.gov/gibill. To find out more about NACUBO’s work on Capitol Hill, visit www.nacubo.org/advocacy/issues.
NACUBO CONTACT Bryan Dickson, assistant director, advocacy and student financial services