A variation on an old adage states, "things aren't like they used to be and never were." The applicability of tax law to higher education is a subject to which the modified adage is apt. If there was ever a time when tax law was generally inapplicable to higher education, when higher education administrators and counsel could ignore the maddening and glorious detail of tax law, it is certainly not now and one would be hard pressed to prove that such a time ever existed. Indeed, many of modem tax law's prohibitions and allowances were motivated by or refined as a result of college and university functions occurring more than fifty years ago. The most famous example, of course, is New York University's tax free operation of a pasta manufacturing company, which will be forever associated with the enactment of the unrelated business income tax and the prohibition against "feeder organizations." The "integral part" doctrine, which is so prominent in modem tax jurisprudence, was formulated in response to the operation of a bookstore by a public institution in Washington. Hence, at least with regard to tax jurisprudence's application to colleges and universities, history proves that the good old days probably never were.
Darryll K. Jones, Tax Exemption Issues Facing Academic Health Centers in the Managed Care Environment, 24 J.C. & U.L. 261 (1997).