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Business and Policy Areas
Business and Policy Areas

IRS Excludes Colleges and Universities From Voluntary Compliance Program

October 7, 2004

IRS Revenue Procedure 2004-59 sets forth a new voluntary compliance program for withholding agents that make payments to foreign persons. The program enables witholding agents that make scholarship, fellowship, wage, and other payments to foreign persons to disclose areas of non-compliance to the IRS in return for reduced tax liability and limited or waived penalties. Note that this new program is not available to colleges and universities or section 501(c)(3) organizations affiliated with institutions. 

The new program is similar to an earlier program that was available to colleges and universities in 2001 and expired in 2002. IRS officials expected a stronger response to the initial effort (announced in Rev. Proc. 2001-20) than was received--only a handful of institutions participated. The service specifies that organizations that were eligible for the 2001 program are ineligible for the new one.

The new program is effective as of September 29 and open until December 31, 2005.


NACUBO contact:  Mary M. Bachinger, director, tax policy