Word: taxed
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...TAX AUTHORITY?...
Before joining HMC, Rose lectured in taxation at Northeastern University and worked as a tax manager for what is now PricewaterhouseCoopers...
While Rose only served as a tax director for a year at HMC before resigning, he previously helped prepare the company’s taxes for ten years as an independent contractor. Although he had never noticed any suspect activity at HMC before—he said he was simply given data from which to produce returns—his new position’s oversight and personnel access provided him with information that gradually coalesced into broader—and more disturbing—insights into the company’s complex network of operations...
According to Rose, HMC frequently under-reported its income from outside money management firms by “netting” it, or cancelling it out, with management fees paid out by the University. This practice, which reduces HMC tax obligations, is questionable because much of the income that Harvard receives from the firms actually derives from management fees that the firms collect from other investors—activities unrelated to the University’s tax-exempt purpose...
Daniel Halperin, an HLS professor who specializes in tax policy and non-profit organizations, said that an evaluation of the proper tax treatment for the income would also depend on whether Harvard’s share of the management fees is collected from regularly conducted trade or business, and the reasons why Harvard is making special arrangements with the money managers. He added that resolving these issues conclusively is difficult without access to more detailed information...