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By Leah S. Yared
By Jamie D. Halper, Crimson Staff Writer

Harvard is still awaiting federal guidance on how to file taxes under a law passed in Dec. 2017 that levied an “unprecedented” excise tax on some universities’ endowment returns, according to University spokesperson Melodie L. Jackson.

Harvard’s endowment, the largest University endowment in the world at $37.1 billion, would qualify for taxation under the the new tax codes Republican lawmakers passed last year. The University's endowment was previously exempt from taxes because the school is a non-profit entity.

Under the new law, Harvard would have paid an estimated $43 million on its endowment returns in 2017 had those been taxed, according to University administrators.

The new tax takes effect only for fiscal years starting after Dec. 31, 2017, and Harvard’s 2018 fiscal year began in July 2017. Endowment returns from fiscal year 2019 will be the first taxed under the new code, so Harvard won’t shell out money to the federal government until next year.

The new tax leaves much to be interpreted, though, and Jackson said the U.S. Treasury Department has still not provided guidance on how schools should file those taxes when they come due.

“We continue to await guidance from the Treasury Department on this unprecedented tax and in the absence of that it would be difficult for Harvard and other affected institutions to know exactly the impact and how it will all work,” Jackson wrote in an emailed statement.

Howard E. Abrams, a visiting professor at the Law School, said it’s common, especially after such a large tax overhaul, to see delays in guidance on each provision. An absence of official guidance does not, however, exempt taxpayers from filing.

“Even if there’s no guidance, the statute is enacted and taxpayers have to comply even if the Treasury doesn’t tell them how to handle all the details,” Abrams said.

Abrams said that without instructions, it might not be clear to universities what exactly is being taxed and how schools should consider each of their entities when filing.

Former University President Drew G. Faust and Harvard’s lobbyists in Washington lobbied extensively against the endowment tax before it was passed. In the months since the bill became law, University officials have continued to speak out about its negative impact on the school and push for its repeal.

Faust said in February the endowment tax would have “pretty significant” implications for the University.

“What [the endowment tax] will do is put constraints on our ability to fund the variety of undertakings that are central to our mission — financial aid and research, public programs, the variety of endeavors across the University," Faust said at the time. “Its ultimate impact will be on limiting the growth in the endowment, and the growth in the endowment is what funds the programs.”

Harvard’s fiscal year 2018 endowment returns have not yet been released, though they will likely become public in mid-September. Though they will not be taxed, they will provide the most up-to-date estimate for how much the University will likely owe next year.

—Staff writer Jamie D. Halper can be reached at Follow her on Twitter @jamiedhalper.

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