Tax Trouble for International Graduate Employees Across US Campuses

BY JOYA JOHN, ANNE PASEK, AND ABHISHEK BHATTACHARYYA 

Joya and Abhishek are members of Graduate Students United at the University of Chicago (AFT/AAUP), and Anne is a member of GSOC-Local 2110-UAW and Academic Workers for a Democratic Union at NYU. They wish to thank members of fellow unions across the country for the conversations over the Coalition of Graduate Employee Unions networks, from which this article grew.

International graduate students across the USA are presently facing serious issues with federal taxes. For those categorised as “nonresident aliens for tax purposes” (typically all international students in their first five years here) universities withhold federal taxes and pay them directly to IRS. Individuals then apply to the IRS for returns.* However, the tax returns for 2014 seem to still not have come through for the overwhelming majority of international students in this category. In addition, over the past couple of weeks, some (but not all) of these graduate students have been receiving letters from the IRS stating that their 2014 taxes have not yet been paid by the withholding agent (the universities), and that the individuals concerned need to pay them immediately, including additional financial penalties for delayed payment.

This is a huge financial burden for low-wage graduate employees, especially as it affects people new to this country, and in many cases the amount demanded is simply more than the bank balance of those affected. To put this in perspective, one University of Chicago PhD student was told the week before last that she owed $4,332 by March 15, another was given a less staggering figure but the closer deadline of March 7.  Moreover, this has also precipitated a great deal of anxiety about the upcoming April 18 deadline for paying state taxes and filing for 2015 federal tax returns. One student at the University of Massachusetts Amherst has been led to understand that because his 2014 returns hadn’t yet come through, he couldn’t file for 2015 returns. Other students have received guidance to the contrary. One student from Rutgers reported that she had found the Tax Advocacy Office helpful. In general, there is widespread confusion and some panic. Faced with a lack of explanation or help from universities, many graduate students are running up legal costs to tackle this situation—not to mention hours on the phone with IRS.

Graduate worker unions have in many cases stepped in to provide much needed information and advocacy. GWC-UAW Local 2110 Graduate Workers of Columbia were quick to respond to the scenario: arranging for an emergency meeting, a petition which has collected hundreds of signatures, a letter to Columbia University from elected leaders in New York, and more. In response the Columbia administration sent a number of emails, including personalised emails to those affected, suggesting steps to take. One of these was for people to ask IRS to put a “hold” on their account (Rice University suggested the same). However, many people have quoted the IRS as saying that this is not possible, while for some others it has worked. An UChicago PhD student reported that according to IRS she could get an “extension” to make her payment, but this also requires paying an added charge. The best that the university administrations are offering, as of now, appears to be some general suggestions on negotiating with the IRS, and maybe help figuring out paperwork— still leaving all the work to the individuals affected, and in many cases suggesting unworkable options.

Individual universities, or universities working together across the country, could certainly propose better solutions, and to that end students and student worker unions should keep organising for a better response from our universities. Simultaneously, for those affected, it may also be advisable to follow through on any suggestions made by one’s university, and pool knowledge with fellow graduate students and unions. However the fundamental problem lies with the cavalier lack of concern on behalf of university administrations. The University of Chicago, for instance, organised a tax workshop last week explicitly excluding international students from its ambit, and has organised a separate workshop for international students on 24th March: beyond the deadlines for paying up, and in the middle of the Spring Break when many people will be away. New York University has issued no communications to its international student population, and is instead waiting for individuals with problems to reach out to its tax compliance office (presuming that they know how to find them, and that they won’t automatically comply with the IRS’ instructions).

Apart from proposing motley and inadequate solutions, there is also a diagnostic aspect of the universities’ messaging, which we will try to work through for the rest of this piece. We will begin by quoting at some length from an email sent out to international students on 24th February, from the Office of the Dean of GSAS at Columbia University:

You may have received recently a notification from the IRS stating that the 1042-S information that you reported on your 2014 Income Tax Return does not match what Columbia reported to them. Please rest assured that the information that you received from Columbia last year on the 1042-S is in fact correct (as were your withholdings), and that the IRS notice that you received is the result of a mistake that is in the process of being resolved.

The problem stems from the data file that the University’s vendor for Tax Treaty processing sent to the IRS, data that serve to verify to the IRS the information that you entered on your 2014 tax filing. The file sent to the IRS by the vendor contained incorrect information, and that discrepancy automatically triggered the e-mail message that you received.

The vendor is aware of the problem, and is working directly with the IRS to resolve it, since it affects not only the 1042-S data filed on behalf of Columbia University but for all of the vendor’s many clients nationally. In other words, there are several other universities whose students have received similar notices from the IRS in the last few days.

In a similar vein, but with further details, the Assoc. VP of Tax and Financial Initiatives at Cornell University sent an email on 26th February:

Many of you may have received an Internal Revenue Service (IRS) Notice or Correspondence Letter regarding what is being called a “1042-S mismatch” issue for 2014.  Although this notice may imply that tax was incorrectly withheld and/or not deposited by the university, the IRS has confirmed to us that is not the case. We are also confident that the paper Form 1042-S you received is correct.  The problem lies with the electronic version of the Form 1042-S that Cornell University filed with the IRS using software developed by an external party, Thomson Reuters.  According to Thomson Reuters, their 1042-S software contained an error that resulted in a difference in a single character between your paper (correct) and electronic (incorrect) Form 1042-S.  As the electronic form did not match the paper form, the IRS is rejecting your 1042-S information due to a “mismatch”.

Cornell University is working diligently with Thomson Reuters, the IRS, and national advocacy groups to resolve this issue for you as soon as possible.  Cornell University will file corrected electronic Forms 1042-S with the IRS as soon as Thomson Reuters issues a software fix to correct the issue noted above or the IRS otherwise agrees to independently correct the error.  Until Cornell University can resolve this issue, it is critically important that you do the following…

New York University, however, appears to have a different understanding of the problem. While the administration there is yet to send out a general email on this subject, the tax analyst has stated that “We have been working with our vendor, GLACIER, on the issue,” thereby suggesting that GLACIER is to blame for this problem. At the University of Chicago, Columbia University, Rutgers, and at many of the universities affected, GLACIER is the software provided by the university to international students to help deal with filing for federal taxes/returns. Is the problem then with the software used by students to file for taxes, as NYU suggests, or is it a problem with the vendor used by the university to withhold and pay taxes, as Cornell suggests? Is it a set of factors?

According to the Director of Office of International Affairs at the University of Chicago, in an email sent to international students on 22nd February, the problem lies squarely with the IRS: “This is neither an error on the part of the University or our tax software, Glacier.” In a similar vein, the Vice Provost for Graduate Education and Dean of The Graduate School of the University of Connecticut, writing on 19th Feb, argued that while the “exact cause of the problem is not yet known,” it “appear[s] to be the result of an error by the IRS.” However, if this were true, why would other universities admit an error with the vendor employed by them? The same UChicago email states, that “Institutions across the US are seeing this, including our peers.” If that is the case, why are the universities affected speaking in different tongues? If union organisers are connected across the country, surely administrative staff are as well? On the face of it the UChicago response appears to entirely shrug responsibility for the situation, rather than propose a plausible diagnostic.

Where then does the problem lie? Is the problem affecting graduate student employees differently from campus to campus, state to state, or between private and public universities? Is this affecting sectors beyond higher education? If our employers and their vendors are responsible for this blunder involving our tax withholdings, why are we being subjected to financial penalties and left out of pocket for almost a year? What will happen with our 2015 tax rebates? As the deadlines loom, and as we individually fret around for solutions and diagnoses, university administrations across the board appear to be proposing non-solutions that are entirely inadequate, passing the buck to students yet again.

There may be exceptions to this procedure, for example if there is a tax treaty between the USA and the home country of the individual involved.

One thought on “Tax Trouble for International Graduate Employees Across US Campuses

  1. Pingback: Tax Snafu Update: Some Progress, But International Students Still on the Hook | Graduate Students United

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