FAFSA Mobile App Announced
In its efforts to update the federal student aid system, the Department of Education is planning to make the Free Application for Federal Student Aid (“FAFSA”) available via a mobile application. Office of Federal Student Aid Chief Operating Officer A. Wayne Johnson said the app would make it easier for students to file for federal aid and provide a modernized experience throughout the application process. Johnson also noted that the app could perform many of the functions that student loan servicers can provide borrowers via the web and telephone. The app will likely arrive in April. More on the future FAFSA mobile app is available. Read More.
Tax Reform Could Impact Colleges’ Unrelated Business Income
If the proposed tax reform passes the Senate, colleges could lose their exemption from tax on certain income not connected to their academic mission. The proposal calls for expanding the unrelated business income tax and would include licensing royalties generated from the use of an institution’s name or logo. Colleges and universities with more than one unrelated business activity would also have to calculate the net income or loss from each activity separately and would not be able to offset income from one activity with loss from another. Several higher education groups believe the tax reporting changes could be burdensome. Read More.
Tax Court Says Country Club Must Pay UBTI Taxes
An Ohio country club may not deduct losses incurred from nonmember services. The Tax Court ruled that when Losantiville Country Club filed its annual Form 990-T, the organization did not show intent to profit from nonmember sales since its nonmember sales did not surpass the direct and indirect costs about those sales and thus it could not apply those losses to negate its taxable investment income. Losantiville had claimed losses against investment income earned from 2010 and 2012, resulting in no unrelated business taxable income (“UBTI”). More on the Tax Court ruling on Losantiville Country Club is available on the Journal of Accountancy website.
Senate Proposal Levies Same College Endowments Tax as House
The U.S. Senate’s proposed tax reform would levy the same tax to private college endowments as the House’s version. Both the Senate and the House are calling for a 1.4 percent tax on net investment income, which will impact about 70 colleges with endowments over $250,000 per student. The focus on endowments is part of Congress’ recent attempts on how endowments can help reduce the cost of attendance at colleges and universities. More on the proposed college endowment tax is available on the Accounting Today website.
Proposed Grants and Contributions Guidance Receives Support
With the comment period ending last week for Proposed Accounting Standards Update (ASU) No. 2017-270, Not-for-Profit Entities (Topic 958) Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made, nonprofit and professional groups and audit firms have expressed support for the Financial Accounting Standards Board’s (“FASB”) attempts to simplify how organizations disclose revenue from grants and contributions. Mostly impacting nonprofits like charities and foundations, the proposal revises the guidance on determining whether gifts to nonprofit groups must be presented as contributions subject to ASC 958-605, Not-for-Profit Entities—Revenue Recognition, or as reciprocal transactions (i.e., exchanges) subject to ASC 605/606. The. Read More.
Topics: FASB, Financial Accounting Standards Board "FASB", Financial Reporting Executive Committee "FinREC", Grants & Contributions, Nonprofits, Not-for-Profit Entities (Topic 958), Proposed Accounting Standards Update
Need for State-Funded Financial Aid Slows
In its latest survey, the National Association of State Student Grant and Aid Programs (“NASSGAP”) revealed that growth in the use of state-funded student financial aid slowed in 2015-16. The total state-funded aid amount that year – $12.5 billion – is an increase of less than one percent from the previous year. The percentage is a big drop from what the NASSGAP measured from 2013-14 to 2014-15, when the year-over-year growth for state aid was around six percent. A stronger economy and demographic declines in various high-population states are being attributed to the small increase in aid. Learn more about the NASSGAP’s survey on the Inside Higher Ed website.