IRS Demands Student Aid DataBy Vipul Bhushan
After many delays, the Internal Revenue Service is now on the verge of obtaining the scholarship and fellowship information about MIT students it has sought since August. An IRS summons served to MIT on April 12 requires that MIT divulge the names, social security numbers, and scholarship and fellowship amounts of all students who received such awards in 1990, according to Frederick I. Crowley, assistant to the comptroller.
The IRS first demanded student financial information on August 24, 1992, said Crowley. MIT responded on Nov. 13 by insisting on a U.S. District Court subpoena before releasing the information, he said. A subpoena was not delivered in early March, when it was expected. Instead, MIT received an IRS summons on April 12 which required much of the same information as the original request, Crowley said.
Unlike the original summons, this request does not ask for the tuition amounts charged to students, nor does it retain the $2,000-above-tuition threshold of the original request, Crowley said. While in the expected subpoena "students would have been the objects" of the investigation, this summons is worded to be part of an ongoing IRS employment tax audit of MIT, said Crowley.
MIT was targeted by the Boston office of the IRS five years ago, he said. The IRS has made "a substantial [financial] assessment" against MIT, although Crowley would not reveal the dollar value of the fines. The Institute is contesting these fines.
Couching the summons within this audit, he said, makes it an "enforceable summons," which MIT's attorneys at Palmer & Dodge say will hold up in court. Frank E. Perkins '55, dean of the graduate school, said MIT will comply with the summons and release financial data about students, but will make an attempt to inform all affected former and current students first.
Perkins said he doesn't "understand the IRS's reluctance" to get a court subpoena instead of resorting to an IRS summons. Crowley speculated, though,that the IRS changed its approach to avoid a court appearance. The prior implication was that the IRS was interested in students' meeting their income tax obligations, Perkins said, but the current summons is ostensibly focused on MIT's withholding policies. "One has to wonder what the IRS's objective is," concluded Perkins.
Perkins presumed that the IRS's actions were intended to either "get some sense of the fellowship and scholarship pool" to form a basis for estimating tax liability, or to "examine individual students." Crowley cited an IRS official as saying scholarships and fellowships "are targeted items for review." He also cited rumors that more senior government officials are making a concerted effort to increase revenue collection.
Thousands of students affected
Seven to eight thousand students' records are covered by the summons, including those of all graduate students who received tuition scholarships associated with research and teaching assistantships, Crowley said. He added, however, that most of these students have nothing to fear from the IRS action.
Crowley guessed that, based on what has happened at other universities, some students would be faced with income tax audits.
Perkins reported that he and Crowley had received numerous inquiries and calls of concern from some of the over 1,500 students who were informed of the subpoena anticipated in March. He expressed concern that his office would not be able to handle complaints from students who will receive the impending notification, the majority of whom he said were current or former graduate students.
Students say audits unwelcome
Anand Mehta G, Graduate Student Council president, noted that these IRS actions would not affect those who have been paying the taxes they owed. "We can complain about the IRS's methods, but what it's doing is legitimate," he said.
He voiced concern, however, that in apparently pursuing students the IRS was targeting an "inappropriate" group. "The IRS is using unduly heavy-handed methods to do its job," he added.
Mehta hoped MIT and the GSC could work with the IRS to minimize penalties assessed to students who paid all their taxes expeditiously.
Caryl B. Brown G, a GSC representative to the Committee on Graduate School Policy, alluded to rumors of "pressure from up top [within the government] to increase revenue."
The GSC will be conducting a workshop with an outside financial consultant to advise affected students of their options, Brown said.