The University owes thousands of dollars in back taxes to the Internal Revenue Service, after failing to withhold taxes for graduate assistants for seven years.

The problem dates back to 2003, when a technical glitch occurred as the University made a transition from an old information technology system to the current Banner system, said Robin Kaler, University spokeswoman.

In 2009, the problem was caught and the adjustment was made at the Chicago and Springfield campuses, but not at the Urbana campus. Of the withheld taxes, 25 percent goes toward federal, 5 percent goes toward state and, if applicable, 4.2 percent for social security and 1.45 percent for Medicare.

Now that the University has begun to correctly tax graduate assistants for 2011, 17 graduate assistants will have no pay left after the withholding and, 56 will have more than 50 percent of their pay withheld. In total, 280 people are affected by the tax change. Graduate assistants were notified of the change Feb. 22.

Teaching and research assistants will not be affected by this, as they are tax exempt. Only graduate assistants, who are assistants not doing research or teaching, will be affected. Graduate assistants make up about a tenth of all University assistants.

“The tax now is in effect, so the University has to collect it,” Kaler said. “The reason that it’s higher than it will be, for example, in the fall (semester) is that we’ve already missed the January and February pay period. We’ve got to collect what needs to be taken out for the semester in the remaining pay period.”

Under federal and state law, graduate assistants are tax exempt up to a $5,250 threshold per year. The base tuition rate per semester is $5,102 for residents and $11,735 for non-residents, but this doesn’t count additional program costs, Kaler said.

Some students are planning to drop out, said Natalie Uhl spokeswoman for the Graduate Employees’ Organization, or GEO.

“Obviously, especially with the short notice, we have a lot of students who don’t know how they’re going to pay their rent or their mortgage next month, don’t know how they’re going to put food on the table,” Uhl said.

Uhl added that the situation is “especially dire” for international students, who have limited options with only a visa.

“Many of them come here with a spouse and a family, but the kind of visa that they’re on doesn’t allow their spouse to work in the United States,” she said. “The international students themselves can’t get a second job.”

Kaler said the University is working hard with the GEO to help affected students.

“We’re just trying to work together to find a viable solution for these students. It’s a little tricky because we can’t change the actual problem, because it’s federal tax law and language within the state tax code,” Uhl said.

Kaler said the University is working on a way to aid students before their next paycheck, March 16.

People with questions can call payroll service center at 217-265-6363. Anybody who thinks they have been misclassified as a graduate assistant and has not yet touched base with their department can call Human Resources office at 217-333-6747.