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IN THE OREGON TAX COURT MAGISTRATE DIVISION Income Tax RYAN W. HERZOG, Plaintiff, v. DEPARTMENT OF REVENUE, State of Oregon, Defendant. ) ) ) ) ) ) ) ) ) )

TC-MD 090627D

DECISION

Plaintiff appeals Defendants Notice of Refund Denial dated October 10, 2008, for tax year 2004 and Notices of Proposed Refund Adjustment, dated October 13, 2008, for tax years 2005 and 2006. The parties submitted cross motions for summary judgment. The aboveentitled matter is now ready for decision. I. STATEMENT OF FACTS The parties agree that during 2004, 2005, and 2006, Plaintiff was a graduate teaching fellow (GTF) at the University of Oregon. A graduate student is eligible for a GTF position during the academic year if he is "enrolled for 9+ graduate credits and [is] admitted to one of the Universitys doctoral or masters programs." (Defs Ex A.) "GTF is not an explicit academic requirement." (Id.) /// /// /// /// /// ///

DECISION TC-MD 090627D

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"GTFs are hired to work .20 - .49 FTE. All are compensated in the following ways: "Each receives a monthly salary (minimum pay rates are established via collective bargaining):1 "Each receives a tuition waiver for 9-16 credits; "Each receives a partial fee remission (GTFs currently pay $150 of the mandatory fees each term, the University pays the remainder); and "Each is offered insurance coverage, the premiums for which are currently paid in-full or in-part by the University depending on their insurance enrollment status." (Id.) "The income for the Graduate Teaching Fellow is reported by the University of Oregon as wages on a W-2 form and withholding tax is paid." (Defs Answer at 2; Defs Ex B.) The parties agree that the income was included in Plaintiffs taxable income. The parties accept that Plaintiff used the income for housing expenses. Plaintiff alleges that the income qualifies for the scholarship award used for housing expense deduction set forth in ORS 316.846 because the income is a scholarship. Plaintiff concludes that the "GTF award is a scholarship" because, in the words of the former Department Head of the Department of Economics at the University of Oregon during 2006 and 2007, it "is primarily determined on the basis of merit * * * [and is] provided to graduate students as compensation for teaching instruction." (Ptfs Mot of Summ J at 2; Ptfs Ex 2.) Plaintiff concludes that because the award is "paid to a graduate student at the University of Oregon to aid the individual in pursuing his or her studies[,] * * * it is a scholarship under the federal definition (citing section 1.117-3 definitions)." (Ptfs Mot of Summ J at 2.) Defendant concludes that the income is not a scholarship or grant and it does not qualify "for the * * * subtraction" because ///
GTFs are members of a union and represented by the Graduate Teaching Fellows Federation for contract negotiations with the University of Oregon. (Defs Ex C.)
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DECISION TC-MD 090627D

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the income is "compensation for services rendered (wages)." (Defs Answer at 2; Defs Resp to Mot for Summ J at 1.) II. ANALYSIS Plaintiff alleges that his graduate teaching fellow award included in taxable income meets the statutory requirements of ORS 316.8462 which provides in part that: "There shall be subtracted from federal taxable income amounts received from a scholarship awarded to the taxpayer * * * that are used for housing expenses of the scholarship recipient at the time the scholarship recipient is attending an accredited community college, college, university or other institution of higher education." At issue is whether Plaintiffs award is a scholarship. ORS 316.846 does not define scholarship. As this court previously noted, "[t]he Oregon legislature intended to make Oregon personal income tax law identical to the Internal Revenue Code (IRC) for purposes of determining Oregon taxable income, subject to adjustments and modifications specified in Oregon law. ORS 316.007." Ellison v. Dept. of Rev., TC-MD No 041142D, WL 2414746 *6 (Sept 23, 2005). As a result, the legislature adopted, by reference, the federal definition for exclusions, including those allowed under section 117 of the IRC for scholarship and fellowship grants.3 Scholarships, fellowships, and other educational receipts, referred to collectively as awards, are generally excludible from gross income if the following occurs: (1) the award is received by an individual who is a candidate for a degree at a qualified educational institution, which (2) maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the schools educational facilities. IRC

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Oregon Law