DeStefano

Joanne DeStefano, Cornell vice president for finance and chief financial officer, testified before Congress May 16. She addressed the U.S. House Ways and Means Committee's Subcommittee on Oversight about operations and oversight of tax-exempt organizations and increasing demands for information from the Internal Revenue Service (IRS).

"The IRS is requiring universities and other nonprofit organizations to report more and more information," DeStefano said, speaking on behalf of the National Association of College and University Business Officers (NACUBO), whose 2,100 CFOs represent public and private nonprofit colleges and universities that are "required to file 16 schedules to disclose a multitude of information about governance, financial information, compensation information, lobbying, fundraising, foreign operations, tax-exempt borrowing and more."

DeStefano "strongly encouraged" the IRS to reconsider recently implemented requests for additional income information through its 990 Form, on which NACUBO has submitted "comprehensive comments."

DeStefano told the subcommittee that Cornell -- which, she said, had $3 billion in operating revenues and expenses during the last fiscal year -- fully complied with a three-year IRS audit process that ended in 2012.

"The IRS audit ... absorbed significant staff time; each information request was complex and often required engagement by multiple staff members and documentation from numerous offices across the university," DeStefano said.

She said the university turned over to the IRS "enormous data files with every transaction for the fiscal year under audit." Cornell provided extensive documentation in response to at least 50 separate information documentation requests including board minutes; policies regarding ethics and organization of subsidiaries; compensation data such as benchmarking studies and advisory information from consulting firms; and information on investments in Cornell's endowment, DeStefano said.

While the detailed reporting was time consuming, "both parties were confident the audit examined the available universe of information," she said. "The IRS undoubtedly has a better understanding of higher education after undertaking the Colleges and Universities Compliance Project."

DeStefano said that NACUBO expects responses to an IRS questionnaire, subsequent audits of colleges and universities, and the final report from IRS to reflect widespread accountability and high standards of compliance with the law.

"Speaking on behalf of college and university business officers, our sector has markedly increased our internal efforts on tax compliance over the last 20 years," DeStefano said. She noted, "Cornell also seeks to be a voice within higher education to encourage the IRS to develop effective approaches to meet the needs of the service, the public and higher education in a reasonable and cost effective manner."

DeStefano concluded: "As stewards of federal education, research and student aid funding; as large employers; as significant operators of, in some cases, massive physical plant operations; and as home to our nation's college students, institutions of higher education take very seriously their approach to compliance with a host of federal rules and regulations, including those issued by the IRS. Ultimately, we hope the IRS uses all of the information it has garnered as part of the compliance project to continue to explore valuable and sensible approaches to streamlining reporting requirements."