I have run into an impasse with our Comptroller, and I need HELP.

We have a PI that has a sub from another university to carry out research
for the USAID.

Our PI has master's students that are helping to conduct this research
under this contract.  The students receive no salary or stipend for their
help.  However, project funds are used to pay for the student's travel
to  Latin America so they can assist the PI with the research.

The problem is that our comptroller's office thinks that the students
should be taxed on the funds spent on their travel because the students are
part of a master's program that requires them to travel abroad and to write
a master's paper.

The comptroller argues that the travel funds are taxable because the
students are "benefiting" from the travel in that the students can use this
experience in Latin America to satisfy the travel requirements of their
master's program and they might actually do some work (i.e., learn
something) in Latin America that they could write about for their master's
papers.

I argue that the students are not required to do their master's paper on
any topic related to this subcontract or to satisfy their field experience
by working on his project in Latin America. They have other choices. They
also earn no course credit for their participation in the project.  Also,
the funds spent for student travel is for the University's benefit (to
comply with the terms of the sub) not the student's.

Now because of this impasse, I will have to get a no cost extension so that
we can iron things out and I am told I need to talk to a new tax person
that has been hired who needs time to "look this up."

Has anyone out there faced anything like this?  I need specific citations
to back up my position.  It seems to me that this type of reasoning will
undermine the very point of research in higher ed!

Pam

Pamela F. Miller, Ph.D.
Director, Office of Sponsored Projects
The University of San Francisco
2130 Fulton Street
San Francisco, CA  94117-1080
TEL  415-422-5368
FAX  415-422-6222
EMAIL  xxxxxx@usfca.edu

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