After days of negotiations in Congress over tax reform legislation, many of the education tax relief provisions contained within the original Senate and House versions of the bills will remain in tact.

After days of negotions by the Joint Committee on Taxation--made up of members of the Senate Finance Committee and House Ways and Means Committee--the Congress narrowly approved a final version of the bill yesterday. Republican leaders plan on sending the legislation to President Clinton when they return from summer recess in September.

The bill--which will result in about $10 billion total in education-related tax cuts--has gained favor among University educators and officials.

"We are generally very pleased with the education tax provisions in the bill," said Karin Johns, director of tax policy for the National Association of Independent Colleges and Universities, a lobbying group in Washington.

Harvard Sees Benefits In Plan

In particular, an allowance for tax-free withdrawals from Individual Retirement Accounts (IRAs) for charitable contributions and an extension of the employer-provided educational assistance tax exclusion will most directly affect the University.

Under current law, individuals who take money from an IRA to make a charitable contribution--which includes those made to colleges and universities faced a stiff tax penalty.

"That severely restricted contributions from that source," said Johns.

Under the new proposal, individuals over age 70 and one-half will be able to make donations with IRA money withdrawn tax-free, starting in 2002.

Education Costs

A tax extension on employer-provided education assistance would benefit University employees who take undergraduate courses at the College.

At Harvard, employees who have worked for the University longer than six months are entitled to take undergraduate and graduate level courses for a charge of 10 percent of the enrollment cost.

Current labor tax laws treat such cost reductions as a taxable benefit. For example, if the enrollment fee for a college course is $4,000, an employee would be taxed on a benefit of $3,600--the difference between the true cost of enrollment and the $400 (or ten percent rate) that Harvard employees actually pay.

The GOP tax reform legislation would extend the exclusion from paying taxes on this benefit through 2003.

Although the Senate's Taxpayer Refund Act of 1999 provided exclusions for both graduate and undergraduate level courses, the compromised legislation only applies to those employees enrolled in undergraduate courses.

But the University still views the extension as a positive step.