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IRS And Education Could Better Address Risks Associated with Some For-Profit College Conversions

IRS And Education Could Better Address Risks Associated with Some For-Profit College Conversions

GAO U.S. Government Accountability Office

IRS and Education Could Better Address Risks Associated with Some For-Profit College Conversions

GAO-21-89: Published: Dec 31, 2020. Publicly Released: Jan 27, 2021.

A for-profit college can be converted into a nonprofit college if it’s sold to a tax-exempt organization and the Education Department approves the conversion.

In about a third of cases we identified, college owners or officials held leadership roles in the college’s tax-exempt buyer. If that is the case, they aren’t allowed to use their influence to inflate the college’s sale price or otherwise improperly benefit from the conversion.

But IRS staff didn’t always follow guidance to assess the risks of improper benefit. Also, Education doesn’t assess ongoing risks in its reviews. We recommended improvements in agency review processes.

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