CCA 201302023: Work-college tuition payments remain excludible scholarships
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This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2013, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.
Plain-English summary
Chief Counsel Advice addresses the continued validity of Rev. Rul. 64-54 for learning-through-working programs at work colleges. The advice states that the revenue ruling remains the IRS's published position and that taxpayers within its scope may continue to rely on it. Payments applied to tuition or related expenses remain scholarship payments excludible under IRC § 117(a). Payments applied to room and board are not excludible under that provision and are taxable. The advice says any change in this position should occur through published guidance.
Ruling snapshot
- Question: Do work-college tuition and work payments remain scholarship payments under IRC § 117(a), and what is the treatment of amounts used for room and board?
- Outcome: Advice given. Tuition and related-expense payments remain excludible, while room-and-board payments are taxable.
- Key authorities: IRC § 117(a); Rev. Rul. 64-54, 1964-1 C.B. 81.
Full text (IRS public release)
ID: CCA-412214-12 Number: 201302023
Release Date: 1/11/2013
Office:
UILC: 117.00-00, 117.02-00
From: -------------------------
Sent: Thursday, April 12, 2012 2:14 PM
To: ------------------
Cc: ------------------------------------------------------- Subject: Advice on 117(a) and Rev. Rul. 64-54
Work Colleges – Revised § 117
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We are replying to your request concerning the continued validity of Rev. Rul. 64-54, 1964-1 C.B. 81. That revenue ruling holds that the value of tuition and work payments granted to students enrolled in a course of study at a college having no tuition charge and requiring all students to participate in a work program which implements its educational philosophy are scholarship payments under § 117(a)(1)(A) of the Internal Revenue Code of 1954. The learning-through-working program (LTWP) described in Rev. Rul. 64-54 was an integral part of the school’s overall scholastic program and the primary purpose of the student work program was to further the education and training of the students in their individual capacities. Rev. Rul. 64-54 is still the published position of the Internal Revenue Service and taxpayers falling within its scope may continue to rely on it. Any LTWP payments applied to tuition or related expenses are still covered by § 117(a) and are not subject to income tax. Any change to this position should be through the published guidance process. We have one caveat. To the extent any LTWP payments are applied to room and board, those payments are not excludible under § 117(a) and are subject to income taxes. Please let me know if you have any questions.
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