Final regulations released to Federal Register: Excise tax on college net investment income

Excise tax on college net investment income

The U.S. Treasury Department and IRS today released for publication in the Federal Register final regulations (T.D. 9917) under section 4968—the provision that imposes an excise tax of 1.4% on the net investment income of certain private colleges and universities with at least 500 tuition-paying students and endowments valued at $500,000 or more per student (“applicable educational institutions” or “AEIs”).

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Read the final regulations [PDF 398 KB] (39 pages as published in the Federal Register on October 15, 2020) that finalize regulations that were proposed in July 2019 under section 4968.

IRS version of final regulations

The IRS on September 18, 2020, posted to its website a version of these final regulations.

KPMG LLP provided a report offering initial analysis about the final regulations (based on the September 2020 version from the IRS). The KPMG report notes, in part, that the final regulations are effective the first tax year beginning after the date of publication in the Federal Register (now scheduled for October 15, 2020). Read: TaxNewsFlash

The September 2020 version of the final regulations contains the following statement:

This document is in the process of being submitted to the Office of the Federal Register (OFR) for publication and will be pending placement on public display at the OFR and publication in the Federal Register. The version of the final regulations released today may vary slightly from the published document if minor editorial changes are made during the OFR review process. The document published in the Federal Register will be the official document.

Read a computer-generated document [PDF 1.3 MB] that provides a comparison of the version of the final regulations submitted today to the Federal Register against the version posted by the IRS on September 18, 2020. This unofficial document was produced by KPMG for the purpose of showing what changes, if any, were made to the regulations prior to being released to the Federal Register for publication. It has not been reviewed for accuracy.


For more information, contact a tax professional with KPMG’s Washington National Tax practice:

Ruth Madrigal | +1 202 533 8817 | ruthmadrigal@kpmg.com

Preston Quesenberry | +1 202 533 3985 | pquesenberry@kpmg.com

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