Harvard Makes 11,000 Employees Pay Too Much In Taxes

How do you say 'ouch' in academic?

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Harvard University. The oldest institution of higher education in the country. Alma mater of more billionaires and Rhodes scholars than any other U.S. school. One of the pinnacles of academia and learning.

It's also home to 11,000 employees who were paying federal taxes they didn't owe -- as much as thousands of dollars -- between 2009 and 2013, according to the website Universal Hub. Sounds like someone in the administration should have spent time in a remedial math class.

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The total amount overpaid was $20 million, according to a letter reportedly sent by the university to employees, according to the Boston Globe. In that report, a few paid "as much as $3,000 to $4,000" more than they should have. For hundreds, the extra payments were in the hundreds of dollars.

The cause of the miscalculation was supposedly an error in managing a supplemental life insurance policy, according to the Globe. Until 2009, the IRS saw it as a taxable subsidy that was part of income. That year, Harvard changed the plan for other reasons but forgot to check whether that changed the taxable status, which it did.

According to a memo reportedly from two Harvard Law School professors who are tax experts, obtained by Universal Hub, the university first became aware of the problem last October and sent a letter on January 21 to employees. But the two professors said that the letter was misleading in a number of ways.

First, it said that "IRS regulations do not allow the University to assist you in filing for a state or federal income tax refund." The two said that there was no such regulation.

Next, the professors said that Harvard did not present the full scope of the problem, omitting mention of 2009 and 2010 and failing to state that, according to the federal statute of limitations, it was already too late to refile for 2009 and receive a refund. A corrected W-2 form would be needed to refile to get a refund for 2010, but that Harvard would likely be unable to do so by the time of the April 15, 2014 deadline. They wrote, "Harvard has a responsibility to make its employees whole for its colossal error."

Harvard's motto, veritas, is Latin for truth. How do you say "ouch" in academic?

In a statement Friday night, according to the Globe, a Harvard spokesman said officials "regret this mistake, offer our sincere apologies to those affected, and are working to remedy the situation as comprehensively and swiftly as possible."

In a letter from Vice-President of Human Resources Marilyn Hausammann, obtained by Universal Hub, the school pledged to "make payments to current and former employees for excess taxes paid, plus interest" for 2009 and 2010 and also to cover any taxes that become due on those payments. Employees can also get reimbursed for their costs to prepare and refile other past taxes.

Wait a minute. According to the Globe, four of the last seven Secretaries of the Treasury had Harvard degrees. Does that mean everyone in the country might have paid too much? Quick, someone check their math!

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Image: Flickr user dmboyer

Filed under: Education
Tags: harvard, taxes
Erik Sherman

Erik Sherman

Contributor

Erik Sherman has written for the Wall Street Journal, Inc, Newsweek, the New York Times Magazine, and other publications. He's a regular contributor to CBS MoneyWatch and Inc.com. Follow him on Twitter at @ErikSherman.

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77 Comments

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c.b6

Is that i am incapable:i hope child doesn‘t encumbers everybody and feel unparallleled honor。study and useful,Exact one is very optimistic to do something。

February 12 2014 at 9:34 AM Report abuse rate up rate down Reply
c.b6

Thank the man of er mister thank the yours and lead:The ignorant children‘s parents Does not know what to do。Feel medical imprtant,Sharp teaching。Let people feel the natural affection is withful。Harvard·i love you。

February 12 2014 at 9:02 AM Report abuse rate up rate down Reply
markmiller2014a

Looks like some lawsuits are in order... Harvard needs to compensate those workers for their mistake but since these are liberals who think people should pay more in taxes they should just forget about it and let the government keep the taxes.

February 09 2014 at 11:44 AM Report abuse rate up rate down Reply
njenel

this is asinine.

February 09 2014 at 10:07 AM Report abuse rate up rate down Reply
bilhee

Seems like Harvard could tap into its $37 Billion dollar Endowment and figure out how to get the money back to their employees without them incurring taxes..

February 09 2014 at 9:19 AM Report abuse rate up rate down Reply
maa2626

hmm- big education is just like big pharma and big oil. maybe harvard will be harassed like JP Morgan.

February 09 2014 at 8:54 AM Report abuse rate up rate down Reply
rbell72981

They are democrats of course they will cheat people and lie.

February 09 2014 at 8:38 AM Report abuse -2 rate up rate down Reply
1 reply to rbell72981's comment
lken06880

Stupid speaks.

February 09 2014 at 9:00 AM Report abuse +4 rate up rate down Reply
David..BRAAPP

As of June 30 2013 Harvard has in its Endowment $32.7 billion and yet they mishandle the wages of their employees like other evil business do..Or do they have an exemption from that type of scrutiny

February 09 2014 at 8:04 AM Report abuse -1 rate up rate down Reply
1 reply to David..BRAAPP's comment
CherMoeLin

Only Republicans are permitted to avoid that type of scrutiny ... per their lawsuit or whatever against the IRS for looking into their "charitable" political organizations that funnel money to the GOP. The other "fake" scandal that isn't a scandal, just like Benghazi. I wonder if people have any clue at all how much they rake in every year under the "guise" of being a charitable organization and having a tax-exempt status? You should take notice of the money that universities are funneling into governors campaigns and "pet projects."

February 09 2014 at 8:17 AM Report abuse -3 rate up rate down Reply
1 reply to CherMoeLin's comment
angalmarketing2

Interesting that you conveniently left out the part where the money taken in by the Democrat charitable organizations operate under the same rules as the GOP, but then you are a liberal looney tune who can only find fault with conservatives. By the way; exactly who do you think Harvard gives money to for political campaigns; give you a hint, begins with a D.

February 09 2014 at 10:18 AM Report abuse +2 rate up rate down
bombaro11515

Thats because they make so much damn money they wouldn't miss it. The liberal Professors should pay more money in taxes to help fund their liberal agenda that they preach to the young impressionable students.

February 09 2014 at 8:02 AM Report abuse rate up rate down Reply
bkr92649

Many years ago, there was an anecdote in Readers Digest about a student shopping in a Cambridge supermarket. He walked up to a quick checkout counter with more than the posted maximum number of items. The cashier asked "Are you from Harvard and can't count or MIT and can't read?".

February 09 2014 at 7:35 AM Report abuse +2 rate up rate down Reply
1 reply to bkr92649's comment
maa2626

or just entitled

February 09 2014 at 8:55 AM Report abuse +1 rate up rate down Reply

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