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05/21/91

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No word yet on possible IRS investigation at Stanford

STANFORD -- Stanford officials say they have had no word yet on reports that the Internal Revenue Service will be adding its auditors to those already on campus examining the university's billing of indirect costs.

In the May 22 Chronicle of Higher Education, Marcus S. Owens, director of the IRS Exempt Organizations Technical Division, was quoted as saying that his office plans to study a number of unnamed universities to see whether they are using improper deductions to limit their payment of unrelated-business income tax.

The tax, known as UBIT, is paid by non-profit organizations on income that is not related to their primary missions.

Owens said his interest in the subject was sparked by news reports about questionable indirect cost claims by universities for yachts, wine and foreign travel. He said he wished to see if university accountants were putting the same expenses in their tax deductions.

As many as 30 federal auditors already are scrutinizing Stanford's accounting practices in the wake of its indirect cost controversy.

As of May 21, Stanford officials said they had not been notified of Owens' plans.

"We haven't heard anything about it," said Larry Horton, associate vice president for public affairs at Stanford University. "We'll let them be the ones to make the call."

Owens could not be reached for comment.

-tj-

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