The Internal Revenue Service has reported finding substantial underreporting of unrelated business income (UBI) and executive compensation among the colleges and universities it selected for examination as part of its Colleges and Universities Compliance Project.

The IRS originally sent questionnaires to 400 randomly selected colleges and universities in 2008.  On the basis of their responses and a review of their Form 990 tax information returns, the Service selected 34 of the schools, about equally divided between public and private institutions, for formal examination.  Of those examined, 90% were required to pay more in unrelated business income tax (UBIT) on their unrelated business taxable income (UBTI).  Of a subset of the group examined on compensation, all were found to have underreported income and were required to pay back withholding and other taxes.