Higher education must tell legislatures how the state should raise the money the colleges want to spend--even if it means higher taxes--and then lobby on behalf of those proposals. This also means addressing new and potentially controversial issues about the role of colleges in state politics. (MLW)

Investigations by the Internal Revenue Service of scholarships awarded by Harvard University suggest a trend toward more stringent enforcement of reporting requirements concerning taxable income received by college students from scholarships. (DB)

The Internal Revenue Service is finding that a number of colleges have failed to withhold proper amounts of tax from employees, evaded required payments of unrelated-business income tax, allowed students to avoid paying certain Social Security taxes, and allowed foreign students to avoid tax withholding on most income. (MSE)

Proposed taxes and bans on college business activities grow out of criticism from the owners of small businesses that colleges and other non-profit organizations abuse their tax-exempt status to compete with tax-paying companies by selling certain items. (MLW)

The Internal Revenue Service has acknowledged that audits of graduate students receiving stipends were based on inconsistent interpretations of tax law but deny any policy to increase monitoring of graduate students' tax returns. (MSE)

A Missouri proposal that parents be allowed to set up special savings accounts for their children's college education that would be exempt from state income tax is described. It is compared to a plan in Michigan that allows parents to prepay tuition at colleges in the state. (MLW)

Governor Blanchard of Michigan announced that the IRS planned to allow parents to participate in the state's prepaid-tuition program without paying additional federal income tax. A broader ruling will take additional time to formulate. The federal government is considering a national plan to allow tax breaks for college savings. (MLW)

Some higher education groups are concerned that the strategies adopted by other groups to counter industry's charges of college abuse of tax-exempt status will further alienate Congress and stimulate new restrictions on the business activities of nonprofit groups. (MSE)

Revisions of federal tax law governing the business operations of nonprofit institutions would no longer define a business activity as "related" to the organization's primary mission, and thus tax exempt, solely because it is operated for the convenience of members or students. (MSE)

A new lobbying strategy by six universities, designed to show Congress that higher education may be willing to give up some tax advantages under current law, is also criticized as a tactical error when Congress is just beginning to consider changes in the tax law affecting nonprofit groups. (MSE)

Small-business leaders have persuaded many lawmakers that nonprofit organizations--particularly colleges and universities--have used their tax-exempt status and government support to gain an unfair advantage over privately owned businesses. Computer-store owners, private chemical-laboratory owners, and travel agents say colleges should not receive…

A vigorous, well-financed lobbying drive organized by supporters of higher education managed to cajole the Texas Legislature and the Governor to award large increases in state support. At the same time laws to stop the growth of some institutions, to raise academic standards, and overhaul teacher education were adopted. (MLW)