Associations representing colleges and universities still objected to the endowment tax that Congress enacted in 2017 but said final rules published by the Internal Revenue Service and Treasury Department on Friday made some improvements to the interim rules the agencies announced last year.
Congress, as part of a sweeping tax reform bill, created a 1.4 percent excise tax on net investment income at private colleges and universities with at least 500 tuition-paying students and assets of at least $500,000 per student.
In a reversal from the interim guidance, the Treasury and IRS now say they will not count a student whose tuition is paid through federal grants, scholarships or institutional aid as a tuition-paying student, said Steven Bloom, the American Council on Education’s government relations director.