What type of entity is Carnegie Mellon University?
Carnegie Mellon University is a corporate, non-profit, educational institution that has been granted tax-exempt status under the Internal Revenue Code Section 501(c)(3).
What does it mean to be a tax-exempt organization under IRC Section 501(c)(3)?
As a tax-exempt organization under IRC Section 501(c)(3), Carnegie Mellon is responsible for complying with appropriate federal and state corporate tax laws:
- The University is exempt from federal and state income tax on revenue from activities within its exempt mission;
- The University is exempt from state sales tax on sales and purchases within its exempt mission (where applicable);
- State sales tax is collected and remitted on sales of certain goods in the University bookstore and other “retail like” services available to the public; and
In addition, as an employer and provider of student financial aid, CMU is responsible for the correct tax withholding and reporting of the income of its faculty, staff, students, employees and independent contractors of the Internal Revenue Service and state tax authorities.
Does Carnegie Mellon University file an annual tax return?
Yes. The University is required to file each year a Form 990, Return of Organization Exempt from Income Tax and a Form 990-T, Exempt Organization Business Income Tax Return with the Internal Revenue Service.
What is a Form 990?
Form 990 is a tax return form used by tax-exempt organizations to provide the IRS with the information required by IRC Section 6033.
What is a Form 990-T?
Form 990-T is a tax return form used by tax-exempt organizations to report unrelated business income and figure and report unrelated business income tax liability.
Are Carnegie Mellon’s tax returns open for public inspection? If so, how are the public disclosure copies obtained?
Yes. The tax returns of the University, Form 990 and Form 990-T, are open and available for public inspection. Public disclosure copies of the returns can be viewed in the University Tax Office. In addition, a copy of the public disclosure returns can be requested by contacting the University Tax Office.
What is Unrelated Business Income?
Unrelated Business Income (UBI) is the gross income derived from any trade or business that is regularly carried on and not substantially related to the organization’s exempt purpose or function.
A vendor is requesting a Form W-9, Request for Taxpayer ID Number and Certification. How do I obtain a completed CMU Form W-9?
A completed Form W-9 can be obtained by contacting the University Tax Office.
What is an IRS Determination Letter and how can I obtain a copy of Carnegie Mellon’s IRS Determination Letter?
An IRS determination letter is a ruling issued to an organization if its application and supporting documents establish that it meets the particular requirements of the section under which it is claiming exemption. Carnegie Mellon has a Tax Determination Letter under IRC Section 501(c)(3) indicating that the IRS recognizes Carnegie Mellon as a tax-exempt, non-profit educational institution. To obtain a copy of the University’s IRS Determination Letter, please contact the University Tax Office.
Is Carnegie Mellon exempt from the Allegheny County Alcohol Beverage Tax (Drink Tax)?
No. Carnegie Mellon is not exempt from the Allegheny County drink tax.
How do I obtain a Sales Tax Exemption Certificate?
What information do I need to obtain a Sales Tax Exemption Certificate?
In order for the Tax Manager to issue a valid Sales Tax Exemption Certificate, the following information must be provided:
- Name of Vendor where purchase was or is being made
- Complete street address of the Vendor (it is required to be printed on the certificate)
- Fax number and/or email address (if Certificate is being provided directly from Tax Department)
- Item(s) purchased for business purpose
In what states does Carnegie Mellon have sales tax exempt status?
Carnegie Mellon is exempt from sales tax in the following states only. The Tax Department should be contacted directly in order to receive the appropriate exemption form/certificate for each particular state. If a state is not listed below, Carnegie Mellon is either not exempt from the applicable sales tax or the state does not impose a sales tax.
- New Jersey
- New York
- West Virginia
When is the use of Carnegie Mellon's sales tax exemption appropriate?
The use of Carnegie Mellon's sales tax exemption is only valid and appropriate (and therefore considered a tax exempt purchase) if the purchase is being made DIRECTLY with CMU funds (i.e. PO, check, P-card).
Is a purchase considered exempt from sales tax if it is made with personal funds (i.e. personal check/credit card) when the purchase is being made for a valid business reason?
No. Although the purchase is being made for a valid business purpose, individuals are not exempt from the PA state sales tax. CMU's exemption is only valid if the purchase is made directly with CMU funds. The sales tax exemption cannot be transferred. Individuals should make every attempt to make business purchases directly with CMU funds to take advantage of the sales tax exemption status.
What forms need to be completed if my department/school is giving a nonqualified scholarship to an individual?
If the nonqualified scholarship is being given in the form of cash/check, the Nonqualified Scholarship Request for Payment Form needs to be completed. If the nonqualified scholarship is being paid directly by the department/school, the Nonqualified Scholarship In-Kind Form needs to be completed.
Where can I find the Nonqualified Scholarship forms and other tax related forms?
When does the University’s tax exempt status apply and does it apply even for purchases made by CMU Qatar or CMU Australia?
The University’s tax exempt status applies when a University purchasing vehicle is utilized (i.e. PO, purchasing card) – even for purchases made by employees in Qatar and Australia. For any purchases made with personal funds, the University’s tax exempt status cannot be utilized.
Are there any purchases where CMU is required to pay the sales tax, even though CMU has a tax exemption certificate?
Yes. CMU must pay the following taxes even though CMU has a tax exempt certificate:
- Hotel occupancy tax/room tax
- Allegheny County Alcohol Tax; note: the rate is also 7% just like the sales tax rate
- Vehicle Rental Tax (PA and Allegheny County)
- Telecommunications taxes
- Amusement Tax
- Unrelated business income tax
- Potential foreign withholding taxes
- Value Added Tax (VAT)
- Certain states where CMU is not exempt from sales tax (there is a list on the Taxation website); the most common is California because we frequently make purchases in this state.
If we have to pay sales tax on our purchase, should the tax expenses be included in one PO line or should the tax expense be broken out on a separate line of the PO?
If the tax for the item is required to be paid by CMU, the tax amount becomes part of the “cost” of the purchase and is not broken out separately.
The Graduate Student Office provides funding to students for various educational experiences. These funds are transferred from the GSO directly the Departments and it is the responsibility of the Department to manage the distribution of the funds. Are these funds considered to be a Nonqualified Scholarship?
No. Funds provided by the GSO and transferred directly to the Departments are not nonqualified scholarships. These funds should still be distributed using the expense reimbursement process.
When does a vendor receive a Form 1099-MISC?
A vendor who provides services to the University with a value of $600 or more in the calendar year will receive a Form 1099-MISC.