What Uncle Sam Giveth He Taketh Away …….
I’ve long maintained that the moment a private educational institution is the beneficiary of taxpayers’ monies then it shouldn’t be without reproach for the public to know exactly how those funds are being spent and who the ultimate beneficiary’s are of those funds..
I found it interesting to find out the IRS will be carrying out audits on numerous universities. And in doing so they will also be looking into the compensation packages for college coaches . Especially in the areas of basketball, baseball and football . Granted, these are the “most popular” collegiate sports and their coaches are amongst the highest paid coaches in all of collegiate sports. When you have a football coach being paid in excess of $4million a year and there are programs being and faculty being cut from an educational budget. I for one don’t care if the athletics program is bringing tens of millions of dollars and you still have student athletes essentially being “one and done” . But yet faculties in some cases are crying poverty as to their status. So let me ask a question since when was the business of education merely now simply about the bottom line ? I was under the impression that education about the pursuit of an education of the student and to make them better and more productive member of society ? .
Slide show for your perusal . Use the directional arrows to move the slide show in the direction you wish to proceed.
Crazy as it seems, we could very well see a situation where we may well see some opposition not only from a number of educational establishments to this but also from certain members of Congress the Senate . Well, what’s new there ? Never mind that the NCAA skirts around so many legislative statutes that it has me wondering who watches the NCAA when they should somehow skirt the law ? Certainly not the Justice Department that’s for sure ! And if the truth be told the universities , they aren’t averse to circumventing the laws themselves. So many people seem to be under the misapprehension that because an institution is private it’s never in receipt of public funds. That’s a fallacy that we can dispel right away because every private establishment tends to avail themselves of public funds directly or indirectly. One can dress it up however they want, but it happens without a doubt !
Courtesy of USA Today
By Steve Berkowitz USA Today
The IRS has begun audits of more than 30 colleges that could include examinations of how schools determine the compensation of highly paid employees, including coaches and athletic administrators, according to an agency report.
The audits could include scrutiny of business activities that potentially can be seen as unrelated to schools’ primary purpose. Among the activities is the sale of corporate sponsorship packages that include athletics or are arranged by athletic departments.
DATABASE: 2009 NCAA football coaches contracts
“Questions about athletics programs, especially at larger institutions, are virtually certain to arise,” says Matthew Hamill, senior vice president of the National Association of College and University Business Officers.
The report, issued this month, was the IRS’ interim look at its Colleges and Universities Compliance Project, which the agency said was part of a larger effort to review the largest, most complex organizations in the tax-exempt sector. Last year, the agency published a study concerning tax-exempt hospitals.
This study began in October 2008, when the IRS sent a long questionnaire to 400 schools of various sizes. The interim report was based on responses from 344 — 177 private, 167 public. Among the items, schools were asked to name, and provide compensation information for, the six highest-paid officers, directors, trustees or other key employees. They were asked for the same information about the five highest-paid who aren’t officers, directors, trustees or key employees.
In addition, the questionnaire asked schools to list their five largest related tax-exempt organizations, based on gross revenue. At some schools, the athletic department is organized as a related exempt organization. At least one such school, Georgia, has been selected for audit, the Athens (Ga.) Banner-Herald reported, citing a letter from the IRS to the school. The IRS has not identified any of the schools it is auditing.
John D. Colombo, a University of Illinois law professor who has written about tax exemption and college athletics, says he doesn’t think the IRS action will fundamentally alter college athletics business. But he adds, “Audits are never comfortable. Just the IRS being there asking questions makes people nervous.”
The IRS interim report noted the large number of schools with an athletics coach among the five highest-paid employees who aren’t officers.
USA TODAY surveys of football coaching compensation have shown the average pay for a head coach in the NCAA’s 120-school Football Bowl Subdivision has risen 46% over the last three years, to $1.4 million in 2009. For the 65 schools in the 2009 NCAA men’s basketball tournament, average pay for a head coach for the 2009-10 season was nearly $1.3 million, USA TODAY found.
“It wouldn’t surprise me if universities got questions about how they justify the … compensation package for a (highly paid) coach,” Colombo says.
The IRS interim report also noted discrepancies between the number of colleges that said on the questionnaire they had engaged in various unrelated business activities and the number that said they had reported the income from those activities to the IRS. “This is expected in cases where the activity is conducted exclusively for the exempt purpose of the organization,” the report said. “For example, this would be the case for a bookstore that only sells books and supplies to students.”
Corporate sponsorships, a significant source of athletics income, are considered different from advertising — and, thus, tax exempt — as long as they conform to certain rules.
“There’s greater certainty in the athletics area (regarding what constitutes non-taxable unrelated business income) than there is in other areas of the operation,” Hamill says.
The question is whether IRS rules are being followed.
“The nature of business deals is always to push the envelope,” Colombo says. “Whether all of these sponsorships hew to the line is something the IRS really wants to find out about.”
When and if however this does take place and the IRS does audit a number of schools as we’re led to believe that they will. Then what action if any ought to be taken by the IRS and in large part the Federal Government by way of either of the following legislative bodies the House of Representatives and the Senate ? Through the House Ways & Means Committee and the Senate Finance Committee . Both of these legislative bodies can make recommendations that would to an extent rein in the unadulterated lavishness of the pay of the establishments in question. If they are prepared to do that with the big banks on Wall St . Then why not proceed along the same lines with the educational establishments within academia ? It’s not as if many of these colleges especially those more widely known aren’t making vast sums of money at the expense of the student athlete ! And in reality how much of those resources are actually being plowed back into the colleges for the benefit of the students and the faculty staff alike ? Far too often now we’re being told of colleges laying of teaching staff but yet college football coaches , basketball coaches and baseball coaches are receiving pay increases far in excess of the rate of inflation. And even if the monies we’re told are through various fund raising activities or from benefactors of the colleges themselves. How in good faith can find this to be acceptable when the educational system itself is on its very knees ?
Consider this , the men’s NCAA Basketball tournament was a tremendous success. But were you aware that of the 65 competing teams , less than half actually had a graduation rate above 45 % ? Is this what we ought to now expect from our educational establishments as it relates to the student athlete ? The biggest misnomer at present is that the student athlete enters to get an education at the expense of the college . The student athlete primarily enters into an agreement with a college merely to hone their skills and they are under no obligation to stay the four years that it might take to obtain a college degree. And even if the NFL and NBA didn’t have their eligibility rules in place as it relates to entry requirement for both sports. What does that tell you concerning what take place as it relates to MLB and the NHL ?
We already see the situation whereby high school graduates eschew the chance to go to college and go off to Europe to chase the money that they can attain by playing basketball professionally on the continent. But bear in mind once having met the requirements of entry into the NBA as a lottery pick they’re by no means guaranteed as a certainty that they’ll end up with a team . And if an athlete should make it unto an NBA roster and has a limited amount of success at the professional level. What then happens should their careers should be curtailed by a career ending injury ? Certainly the professional body whose employ that they’re in, can immediately discard them like a worn out pair of shoes should they see fit to do so.
My own thinking on this matter isn’t that the IRS will seek to audit the colleges but why not tighten the loopholes that allows many of them to operate under in the fashion that they do when it comes to their accounting ? Nowhere is this more blatant than with them being allowed to set up endowments and charitable organizations as it relates to their status and wherein their business practices have been anything but that. Doubt my word then look at what has taken place at USC with its basketball program and the payment made by former coach Tim Floyd to O J Mayo when he was a player on the team . These and other countless transgressions have come to light concerning the Trojans’ athletic program under AD Mike Garrett . But it’d be remiss to state or think that USC is “the only school” that has acted in such a manner ! An audit of the schools could very well lead us to some of the murkier and seedier side of things now taking place within many of the collegiate educational establishments up down the country. And it may well create a situation that not even Congress or the NCAA would like to acknowledge. Let alone the college themselves who seem to act as if they conduct themselves in such a manner where we the public ought to hold them as being above reproach. If that were true then wouldn’t they as such be amenable to opening up their books for public scrutiny be they a state ran or private institution ?
Picture gallery for your perusal .
As the title of this piece would suggest …..”What Uncle Sam Giveth He Taketh Away “. And what many of these schools most certainly don’t want to lose is their exempt status as it now relates to their incorporation. You can’t say that they won’t forewarned and some of us didn’t see this coming ? It had to happen and should happen if we’re to see transparency not only from many of the colleges but also from the NCAA itself. What thoughts if any do you have on the subject matter ? By all means chime on in with a comment . I’ll look forward to responding in kind to any points that you might raise. Thanks as always !
NB: House Ways & Means Committee is the tax writing arm of Congress and in essence is the very body who writes our tax laws.
2) Senate Finance Committee can draw up their own legislative statutes as it pertains to tax appropriations but in essence whatever laws are enacted in general falls in line with what’s initially drawn up by the House’s own bill before it’s brought before the President for his final seal after a vote has been taken in both legislative chambers.
Alan Parkins aka tophatal ………………
50 cent ………………. “I Get Money”