GEO, UI officials collaborate to raise grants in tax glitch aftermath

_Editors note: This article is part of The Daily Illini’s year in review edition. These articles are meant to round-up the most important news of the academic year, Fall 2010 through Spring 2011._

In February, it was announced that the University owed 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 IT 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.

While the University is responsible for paying all the back taxes, there was a significant reduction to some graduate assistants’ pay. After the revision, 17 graduate assistants had no pay left and 56 had more than 50 percent of their pay withheld.

“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,” Kaler said. “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.

The Graduate Employees Organization, or GEO, and the University worked together to provide aid to the graduate assistants, whose pay would be severely reduced. In March, University officials raised the maximum grant provided to graduate employees from $500 to $2,200.

“We don’t always see eye-to-eye with the University, but this is one time when we got great results through collaboration,” said Katie Walkiewicz, co-president of the GEO.

These grants received through the Office of the Provost are “unrestricted gift interest income,” meaning that students will not have to pay the University back. However, they will still have to pay income taxes on these emergency funds.

Currently, graduate employees who do teaching or research assistance receive tax exemption for the tuition waivers the University provides under the Illinois tax code.

However, for graduate assistants whose work is classified as clerical or administrative, and therefore not tax-exempt, a good portion of their tuition waivers are paid in taxes.

The real problem lies in the tax code, said Natalie Uhl, GEO spokeswoman.

“(Graduate assistants) are not making full-time salary,” Uhl said. “Their tuition waiver monetarily has a much higher value than full-time employees, so their taxes are disproportionately high compared to what they make.”

The withholding will be spread out over more months in the fall, but it will still continue to affect graduate assistants’ pay.

“It is something going forward students will need to understand because it’s not going away,” Kaler said.