We have from time to time noted the potential tax problems of the UCLA Grand Hotel project. More generally, there is growing scrutiny of commercial-type activity conducted by universities that claim tax exemptions.
Inside Higher Ed today points to a court decision that questions Princeton’s tax exempt status. It links to a local New Jersey newspaper:
A lawsuit that argues Princeton University violates the provisions of its tax-exempt status survived a university-led attempt to throw the case out Thursday. Plaintiffs in the case argue that, because Princeton is earning hundreds of millions of dollars in patent royalty income and is distributing some of that money to faculty, the school is deeply involved in commercial enterprise and isn’t entitled to its tax exemptions. The suit also takes aim at campus buildings that host extensive commercial activity, such as the Frist Campus Center and McCarter Theatre, which sells tickets to the general public for many events and performances…
The Inside Higher Ed story is at http://www.insidehighered.com/quicktakes/2013/07/01/suit-challenges-princetons-tax-exempt-status
The tax folks are thinking they are owed: