The Catholic University of America

Finance: Accounting
Tax Compliance Policy

 

Approved by: Board of Trustees
History: Issued -- March 14, 2002
  Revised --
  Additional History
Related Policies: Treasurer's Scope of Responsibilities:
Additional References:  
Responsible Official: Treasurer and Vice President for Finance and Administration tel. 202-319-5606
 

I. Introduction

The university is subject to taxation and reporting requirements from the Federal Government, The District of Columbia and other jurisdictions. To comply with these requirements, the Vice President for Finance and Treasurer shall, through the Office of the Controller, set procedures to ensure compliance with these requirements and ensure timely submission of required returns and remittances.

This policy applies to all faculty and staff (including student employees) in the conduct of university financial affairs. All faculty and staff are required to provide information on activities which may have tax and reporting requirements.

 

II. Definitions
N/A

III. Sales Taxes

The university requires collection of sales tax by academic and administrative departments (including student groups) on sales of goods and services as provided by the laws of the jurisdictions in which the university operates. To ensure proper collection, departments are directed to contact the Office of the Controller to determine applicable sales taxes for any activities where goods and/or services are sold to individuals or other entities. Any department which conducts activities where goods or services are provided to the public, including students, faculty and staff must confirm with the office of the Controller the sales tax implication. Activities in jurisdictions (including catalog sales) other than the District of Columbia may be subject to sales taxes in those jurisdictions; therefore, confirmation of the correct sales tax activity is required for all jurisdictions.

IV. Unrelated Business Income Taxes

The university is required to file with the Internal Revenue Service tax returns reporting on fiscal activity beyond the teaching, research and service mission. The definition of unrelated business income is a trade or business which is regularly carried on whose conduct is not substantially related to the exercise and performance of the organization's exempt purpose (i.e., education).

Examples of unrelated business include public and alumni memberships in university athletic facilities sold to the public, travel tours sold to the alumni and public, sales of use of university computers or computer facilities or other services, sales of advertising on university facilities, exclusive contracts with vendors (i.e., beverage contracts). Any department which conducts an activity which may meet this definition is required to discuss with the Controller's Office the tax treatment of the activity. Payment of taxes on the unrelated business income shall be an expense of that activity.

V. Escheat Taxes

The District of Columbia requires the university to remit unclaimed property (escheat) in the forms of un-cashed checks, abandoned assets or account credit balances. Any department which collects funds from students or other individuals or entities, must notify the Controller's Office of any credit balances or other assets remaining in the department at each fiscal year end.

VI. Employment Taxes

Payments for compensation to employees of the university are generally subject to Social Security and Medicare taxes as well as Federal, State and Local income tax withholding. It is the responsibility of the Payroll office to collect proper documentation to correctly withhold and remit these payments.

Non-cash benefits provided outside official university benefit plans (Retirement, Tuition Remission, Health Insurance, etc.) may have tax consequences for the individual. Before providing any compensation or reimbursements, departments are required to review the tax consequences of their planned transaction with the Controller's Office in advance of the commitment to the individual to ensure proper tax treatment. Disclosure to the individual must be made to inform them of the university's treatment of the benefit, but no personal tax advice is provided by the university to the individual. The individual should be encouraged to seek their own tax advice from their personal tax advisor or through their own research.

VII. Real Property Tax

The university is required to pay Real Property tax on property not used for the educational mission. The university, through Institutional Advancement, may receive offers of gifts of property which may subject a department to an expense of real property taxes related to that property while it is held by the university. Offers of any gift should be reported to Institutional Advancement and no gift accepted on the university's behalf without the approval of the Vice President of Institutional Advancement as well as the Vice President for Finance and Treasurer and the Vice President for Administration.

VIII. Other Taxes

Tax law comes from legislation and is interpreted by court decisions. It is the responsibility of the University Controller to comply with applicable and new tax law. It is the responsibility of a department, prior to entering into a new business activity or making a payment to an individual outside of payroll compensation or normal reimbursement to contact the Controller to acquire information about the tax treatment of that new activity or payment.