University Tax Compliance provides assistance with all tax compliance issues including payroll taxes, property taxes, sales tax, unrelated business income tax and employee classifications.

University Tax Compliance works to ensure the accuracy of the University’s various tax filings for Federal, state, and local obligations. University Tax Compliance provides training and consultation to University personnel for any and all tax-related matters.

Purchases by or on behalf of the University (in Indiana)

The University is a governmental agency created by an Indiana Code statute. It is, therefore, entitled to certain exemptions from tax for purchases and sales that support the exempt government function and educational mission of the institution. Transactions that do not support the University’s exempt educational mission or that are associated with a proprietary activity are subject to tax.

Transactions involving tangible personal property or services are exempt from sales tax pursuant to Indiana Code 6-2.5-5-16 if the purchases are invoiced directly to the University and paid for directly via University funds, and the purchases are for an official University function and not a proprietary activity.

The requirement for expenses to be paid directly via University funds means that if an item is purchased with private funds and is to be reimbursed by the University, the purchase is not exempt and sales tax must be paid at the time of purchase.  

If an item which would have been tax exempt if purchased directly with University funds is instead subject to sales tax due to purchase with private funds, any reimbursement will not include the sales tax paid.  

In the State of Indiana, purchases for the private benefit of any individual, such as meals and lodging, are not eligible for exemption. Additionally, purchases used for social purposes are never exempt.   Tangible personal property purchased for resale by the University is eligible for the sales tax exemption. If an item is purchased on a tax-free basis and is later used for a proprietary purpose the University is liable for use tax on that item. 

The University is recognized as exempt from sales tax in several other states. Please see the Sales Tax Exemptions Matrix (PDF) and contact University Tax Compliance (view email) to request any forms you may need including the Indiana exemption certificate (Form ST-105).

Sales by the University

Sales of tangible personal property as part of a proprietary activity by the University are generally subject to sales tax. Please see the Sales Tax Collection Matrix for a complete breakdown of collection responsibilities based on the purchaser.

A large exception to the proprietary activities rule is the sale of food directly to or for the primary benefit of students. Such sales may take place on an exempt basis as long as certain conditions are met.

For more information please see the Procedure for Collecting and Paying Sales Tax.

Yes.

While Ball State University has not applied for exemption under section 501(c)(3), as a governmental unit, the University is not a private foundation for the purposes of the taxable expenditure rules for grants made by private foundations.

Occasionally supporting documentation may be requested from a potential grantor as to the University's status as a charitable organization. The Internal Revenue Service provided a determination letter (PDF) to the University many years ago which should satisfy such requests.

Since Ball State University is an integral part of the State of Indiana for federal tax purposes, contributions to or for the use of the University are contributions to or for the use of a state. Accordingly, contributions to or for the use of the University are contributions to or for the use of an entity described in section 170(c)(1) of the Internal Revenue Code of 1986, as amended, and are for exclusively public purposes and are therefore generally deductible under section 170(a)(1) as contributions to a “governmental unit” described in section170(b)(1)(A)(v). Furthermore, bequests and gifts made to the University are deductible for federal estate and gift tax purposes under section 2055(a)(1) and section 2522(a)(1), respectively.

Generally, no.

While the University does receive funding from outside organizations directly to fund research and other sponsored projects, the Board of Trustees has designated the Ball State University Foundation as the central administrator of gifts for the benefit of the University. While the University will accept gifts made directly to the University, absent unique circumstances making a direct gift to the University more appropriate, donors shall be requested to make gifts to the Foundation. The Ball State University Foundation has the responsibility to see that all gifts are receipted and recorded in accordance with federal tax law. More information on giving can be found here.

Generally, no.

If you are a foreign national student-athlete receiving a U.S. source scholarship (e.g. scholarship paid from Ball State University, a U.S. government agency or any other U.S. entity) you should be aware that U.S. tax law may require the University to report the amount awarded to you to the Internal Revenue Service (“IRS”) on a Form 1042-S. Additionally, tax law may require the University to withhold federal income tax from such scholarships.

The payment of a qualified scholarship to a foreign national is not reportable and is not subject to withholding. A qualified scholarship means any amount paid to you as a scholarship to the extent that, in accordance with the conditions of the award, the amount is to be used for the following expenses:

  • Tuition and fees required for enrollment or attendance at an educational organization, and
  • Fees, books, supplies, and equipment required for courses of instruction at the educational organization.

Amounts that do not represent a qualified scholarship are subject to U.S. taxation and reportable on Form 1042-S. For example, those parts of a scholarship devoted to travel or room and board are subject to withholding. Taxable amounts will be determined each month of the semester. This tax will be charged to your student account and will become part of your total financial obligation to the University.

While Internal Revenue Code section 1441 requires the University to withhold at a rate of 30%, a reduced withholding rate of 14% is available for individuals temporarily present in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act and which are incident to a qualified scholarship. In addition to the 14% withholding for Federal income tax purposes, there will be a 5% withholding done for Indiana income tax purposes making scholarships subject to a total 19% withholding rate.

In addition to the lesser withholding rate due to their immigration status, residents of certain countries may be entitled to further reduced tax rates, or exemption from tax, under an applicable tax treaty between their county and the United States. Note that an individual taxpayer identification number (ITIN) or a Social Security number (SSN) is required to claim a treaty to lessen the withholding due on taxable scholarships. If a student-athlete will not be employed by the University, they may be ineligible for a SSN. In this case, University Tax Compliance can assist the student-athlete with applying for an ITIN. Student-athletes may schedule an appointment for ITIN assistance by emailing view email.