NORTHERN ILLINOIS UNIVERSITY (ECWd) -
Attention students, and parents of students, at Northern Illinois University! If you are unhappy with the high dorm prices, pay attention to this story! Considering NIU’s own reporting of a dorm room’s fair market value to the IRS, you should be unhappy. You ARE paying too much for the room.
A while ago we posted a story on one of NIU’s affiliate (aka temporary) employees, Ken Wilson, who was allowed to live in a dorm—rent free—for over a year . At that time, the University stated “there is no value” in the apartment as it was an “unused staff apartment”. Apparently, at the time, neither NIU’s payroll department nor Wilson, who is a CPA himself, were even aware of IRS rules which state that employer-provided housing is a taxable fringe benefit (with limited exceptions which are not applicable to this situation), and is taxable at fair market value. The fair market value of the fringe benefit is to be added to the employee’s total compensation amount shown on his W2.
Subsequent to our article, NIU did correct Wilson’s W2 for the time in 2014 that he was living in the dorm room. NIU and Wilson must have agreed that the adjusted amount reflected the fair market value of the dorm room as per IRS rules. But did it?
NIU had previously claimed that there were no comparables to use to justify a taxable amount to add to Wilson’s W2. But NIU knows what they are actually charging students for the use of various dorm rooms and Wilson should also know how to easily find the value of a dorm room as he has had listed many years’ of experience in Higher Ed on his linkedin page. Here is NIU’s website that gave a range for dorm costs for 2013-14. This site shows the dorm costs broken down by building and type of room. Given that NIU’s estimated cost of a suite with a bath (similar to an employee apartment?) in a renovated building such as Grant (where the employee resided) is $9,782 for the year, which would be actually two semesters or nine months, the cost of a dorm room is slightly over $1,000/month.
So, since the IRS requires fair market value to be used as the basis for an employee’s taxable income for fringe benefits, using NIU’s own published costs for dorm rooms, Wilson’s CY14 W2c should show an adjustment for approximately $11,000 for the 11 months (331 days per NIU) that the employee lived in the dorm. Did it?
NIU filed this amended W2c [HERE], which adjusted the prior reporting of $145,870.40 to a new figure of 148,620.40. Per the adjustment ($2,750.00), the fair market value of the room was only $250/month, which is $2,750 for the 11 months. How did NIU come up with that value? And did Wilson agree that that was the appropriate amount? Most importantly, does the IRS approve of their “fair market value” appraisal?
Until the time that the University refiles another 2014 W2c for this employee, all students living in NIU dorms should question the University as to why they seem to be overcharged for the use of a dorm room when NIU itself has filed an official document with the federal government stating that the fair market value of a dorm room is only around $250 per month!