General Tax Information
- Ensure timely filing of the University and, where applicable, its affiliated organizations' Federal and State tax returns, reports and payments
- Develop necessary procedures and reporting systems to ensure compliance with Federal and State tax laws
- Monitor University compliance with respect to tax matters
- Track legislative tax developments at the Federal and State level and advise the University community accordingly
- Conduct tax research as needed and inform the University community of any forthcoming tax consequences
- Function as the liaison with Federal and State tax authorities and with outside accounting and consulting firms with respect to tax issues
Occasionally it may be necessary to offer reimbursement of personal moving expenses to new professional staff when issuing an offer of employment. University policy as stated in Admisistrative Policy and Procedure number 257 requires that moving expenses be funded within the hiring unit's resources and the maximum amount allowable is the equivalent of one month's salary of the individual. Only new deans, academic administrators, and executives are eligible, as determined by the university's employee class.
The University's moving expense policies and regulations are intended to be an "accountable plan". This means some moving expense reimbursements are reported as non-taxable to the employee, while others are reported as employee compensation. To be reported as non-taxable, reimbursements for moving expenses should be submitted to the Accounts Payable Office within 60 days after the move is completed.
See Policy 257 for more information.
IRS Publication 521 Moving Expenses explains the deduction of certain expenses of moving to a new home. If you recently started a job at Oakland University you may find this information helpful for federal income tax purposes. The following topics are discussed:
- Who can deduct moving expenses
- What moving expenses are deductible
- What moving expenses are not deductible
- How a reimbursement affects your moving expense deduction
- How and when to report moving expenses
University policy as stated in Administrative Policy and Procedure 262 was issued to ensure that each service provider (worker) is properly classified as an employee or independent contractor in accordance with federal and state tax and labor laws. University departments that engage service providers must submit the required documentation for determination of a worker's tax status before any services are performed or payment requests are processed.
Because the potential liabilities and penalties are significant if an individual is treated as an independent contractor and later found to be an employee, each working relationship must be thoroughly researched and analyzed. Before a working relationship is established, departments should complete and submit an Employee Versus Independent Contractor Classification Request to the Tax Compliance section of the Controller's Office. The purpose of the checklist is to gather information to assist in the proper determination of the worker as an employee or an independent contractor. Federal and State regulations assume all services are provided by employees and puts the burden of proof on the employer to show that an independent contractor relationship exists.
Is your department considering the use of contract labor (an independent contractor)? Should this individual be paid as an employee instead?
What difference does it make? If a worker is classified as an employee Oakland University is responsible for:
- the withholding and timely remittance of Federal and State income taxes in addition to FICA taxes
- the timely remittance of the Univesity's share of FICA,and the unemployment insurance on employee wages
- the annual reporting of wages paid on Federal Form W-2 Wage and Tax Statement (independent contractors who meet reporting requirements receive a Form 1099-MISC Miscellaneous Income)
Whether a worker is an employee or an independent contractor hinges on the level of direction and control which the University has the right to exercise.
All departments must forward an Employee Versus Independent Contractor Classification Request to the Tax Compliance section of the Controller's Office for review and proper classification before entering into a personal services agreement. For determination, complete and submit the request to the Tax Compliance section of the Controller's Office at email@example.com.
Do not use the checklist for services from a corporation, partnership, or limited liability company that uses an employer identification number (EIN) for tax purposes. The checklist is only required for payments to individuals and sole proprietors.
Because the University sells tangible personal property to final consumers, it is required to remit a 6% sales tax on taxable retail sales. The tax is paid to the State of Michigan since state law prohibits city or local units from imposing sales or use taxes.
State law requires the collection of a 6% use tax when property is rented to non-exempt entities and sales tax was not paid at the time of acquisition. Renters and lessors who did not pay sales tax on property at the time of acquisition must collect and report use tax on rental receipts received from individuals or organizations not otherwise exempt from tax. In these instances, departments must collect and report use tax on rental receipts each time property is rented or leased to non-exempt entities.
See Policy 270 for more information.
Reporting Sales and Use Tax
All departments subject to taxation must complete and submit a Michigan Sales and Use Tax Worksheet each month and submit it to the tax compliance section of the Controller's Office by noon on the 15th day of the month following the month being reported.
Departments may deduct nontaxable sales from gross sales reported on the Monthly Sales & Use Tax Worksheet. Deductions taken for tax exempt sales must be substantiated in department records. For certain exemptions, departments must obtain from purchasers a completed Michigan Sales and Use Tax Certificate of Exemption.pdf and a copy of the purchasers "exemption ruling letter" issued by the Michigan Department of Treasury. Departments should retain Sales & Use Tax Worksheets and supporting documentation for tax exempt sales for the current fiscal year, and the immediately preceding three fiscal years.
Sales Tax Exemptions
Oakland University, as a nonprofit entity and instrumentality of the State of Michigan is exempt from the payment of sales and use taxes on purchases and rentals of tangible property from vendors licensed to sell at retail in Michigan. The purchase or rental must be for University consumption or use, and the consideration for these purchases must be paid from University funds.
A vendor licensed to sell at retail in Michigan may request documentation to support the University's tax exemption. Departments should provide a Michigan Sales and Use Tax Certificate of Exemption.pdf to establish a valid exemption claim.
University Sales Tax Exemptions - Other States
Each state's laws are different as to whether the University can be exempt from taxation on lodging, rentals, or purchases made in a particular state. The states listed below allow Oakland University to purchase tangible personal property or taxable services that will be used exclusively for educational purposes without payment of state sales or use tax. In order to be exempt, the sale must be billed directly to (i.e. with a University purchasing card or P.O.) and paid for directly by the University. Exemption certificates are not valid for purchases when payments are made with cash, personal checks, or personal credit cards. When any of these payment methods are used, faculty and staff must pay sales tax at the time of purchase even if they are to be reimbursed by the University. The states not listed below currently do not allow the University a sales tax exemption.
The University's Michigan sales tax exemption certificate does NOT apply when business is conducted outside of Michigan. The University may conduct business in other states such as attending conferences or participating in collegiate athletic events. When a department conducts business in another state, they should check the information on this web page to determine whether purchases may be exempt from sales tax. The appropriate forms to claim exemption may be accessed by selecting one of the hyperlinks from the list on the left.
Oakland University may make tax free purchases in the following states depending on the type of goods or services purchased:
An exemption is allowed from sales and use tax on purchases or leases of tangible personal property and transient rental accommodations (hotel/motel lodging). A copy of the Consumer's Certificate of Exemption.pdf must be provided to the vendor and accompany the payment.
Out-of-State nonprofit colleges and universities are exempt from sales and use tax on purchases and leases of tangible personal property when supported by Form ST101 Sales Tax Resale or Exemption Certificate.pdf. Once this form is on file with the vendor, it covers all of a school's future exempt purchases.
Rooms rented to educational institutions are exempt from taxes if the charge is billed directly to - and paid directly by - the educational institution, and the transaction is supported by Form ST-104-HM Sales Tax Exemption on Lodging Accommodations.pdf.
Exemption is allowed from Retailer's Occupation Tax (state sales tax), Service Occupation Tax, Use Tax, and Service Use Tax. In order to make tax fee purchases, vendors must be provided with Oakland University's tax exemption identification number (E9929-9151-01) issued by the Illinois Department of Revenue. Oakland University is not exempt from Illinois Hotel Operator's Occupation Tax since it is levied on the hotel operator and not upon persons occupying the rooms. Therefore, a university that is exempt from sales tax is not similarly exempt when renting a hotel or motel room.
An exemption is allowed from sales tax on purchases of tangible personal property except for HOTEL ROOMS, MEALS, utilities, vehicles, watercraft, or aircraft. Oakland University is registered with the Indiana Department of Revenue and has been issued an Indiana Not-For-Profit Tax Registration Certificate. The TID (0137364520) and LOC (000) numbers assigned to Oakland University must be provided to the vendor on completed Form ST-105 Indiana Department of Revenue General Sales Tax Exemption Certificate.pdf.
An exemption is allowed from sales and use tax on purchases or leases of tangible personal property and taxable services including lodging. A non-Kansas exempt entity (such as a university located in another state) making a direct purchase in Kansas will simply need to complete an exemption certificate for the retailer. Form ST-28 the Designated Or Generic Exemption Certificate.pdf has been designated for this purpose.
An exemption is allowed from sales and use tax on purchases of tangible personal property and taxable services including lodging. The vendor must be provided with a copy of the Maine Revenue Services Permanent Exemption Certificate.pdf.
Exemption is allowed from sales and use tax on purchases of tangible personal property and taxable services including lodging. A copy of the Mississippi State Tax Commission Determination Letter.pdf. must be provided to vendors at time of payment to verify Oakland University's exempt status.
Exemption allowed from sales and use tax on purchases of tangible goods and services including lodging. The vendor must be provided with a copy of the State of North Dakota Certificate of Exempt Status - Exempt Organization.pdf.
Exemption allowed from sales and use tax for purchases of tangible personal property or taxable services including lodging. The vendor must be provided with a copy of the State of Rhode Island Division of Taxation Certificate Of Exemption.pdf.