The Internal Revenue Service has concluded its examination into the federal tax returns of Missouri Western State University. As a result of the findings, Missouri Western will pay a total of $112,443 in past due for 2012, 2013 and 2014, and $6,400 in penalties in 2012. The total represents about .5 percent of the more than $21 million Missouri Western paid in federal taxes and withholding in the three years covered by the examination. As a result of the examination, Missouri Western has implemented new accounting safeguards and procedures.
“This examination provided an opportunity to check our policies and procedures and compliance with IRS tax code,” said Dr. Cale Fessler, vice president for financial planning and administration. “We have taken prompt action to address the findings of the audit and are appreciative of this learning experience.”
Last fall, the IRS randomly selected Missouri Western for an examination of its tax returns for 2012. After an initial look at the records Missouri Western provided, the university agreed to expand the examination to cover 2013 and 2014 with a specific focus on international faculty and international student taxation and the taxability of non-compensatory benefits, such as university housing and the use of vehicles donated to the university.
Missouri Western will pay $100,474 in past due taxes related to wages earned by international faculty and scholarships given to international students.
“The rules and treaties governing the taxation of international residents are complex and frequently changing, and the growing internationalization of our campus makes this an especially important issue,” Dr. Fessler said. “Missouri Western attracts students and faculty from dozens of countries throughout the world, each with different tax codes and tax treaties with the United States. Since the examination, we have added software to better identify international faculty and students, complete required documentation before payments are made, and track any changes that impact taxation rates for citizens of other countries.”
Missouri Western will pay $11,968 in past due taxes related to non-compensatory benefits in 2012 and 2013. The university has developed procedures to better track the receipt of benefits and reflect the value of those benefits in the payroll process.
Missouri Western was fined $6,400 for unfiled Form 1099s on 32 individuals/businesses paid by the university in the tax year 2012. To prevent a recurrence of this issue, Missouri Western has enhanced its process of issuing required forms before payment to non-employees.
The Division of Financial Planning and Administration worked with BKD CPAs & Advisors to comply with the records request. Michael Engle, a CPA with BKD, said the examination was “very positive” and “one of the smoothest exams I have ever handled.”
“(The IRS agent) indicated to me she thought MWSU was really trying hard to follow the rules,” Engle wrote to Dr. Fessler in a letter earlier this month. “I believe she said that based on the fact that the information MWSU presented to the IRS was always on time or ahead of schedule, complete, transparent and very organized.”
Missouri Western State University is a comprehensive regional university providing a blend of traditional liberal arts and professional degree programs. The university offers student-centered, high quality instruction that focuses on experience-based learning, community service, and state-of-the-art technology. Missouri Western is located in St. Joseph, Mo., and is committed to the educational, economic, cultural and social development of the region it serves. Visit www.missouriwestern.edu.