Pa. college-loan agency pays $12M to IRS

HARRISBURG, Pa. (AP) — The quasi-state agency that provides low-interest tuition loans and grants to Pennsylvania college students is paying more than $12 million to settle an IRS investigation into the proceeds from its tax-exempt bonds.

The Pennsylvania Higher Education Assistance Agency made the disclosure Nov. 17 in a quarterly report and a filing with the federal Municipal Securities Rulemaking Board in what accountants and others say involves federal laws meant to prevent tax-exempt borrowers from profiting from bond proceeds.

Tax-exempt organizations are typically supposed to pay any such profits to the IRS.

PHEAA is the first student-loan agency to settle with the IRS in what appears to be wider IRS scrutiny of the industry’s practices.