Tax Expenditures

This report provides information on employer-provided educational assistance, which covers expenses ranging from tuition to books, between 1992 and 1994 under section 127 of the Internal Revenue Code. Under section 127, the amount of educational assistance that employees receive from their employers is generally excludable from employees' gross income. GAO discusses (1) the characteristics of employers providing educational assistance, such as the number of providers and their size, and (2) employees eligible for and receiving it, such as the number of recipients and their level of study. GAO also identifies other tax provisions related to employer-provided educational assistance and discusses the differences between them and section 127.

GAO found that: (1) according to IRS data, employers annualy filed over 3,200 returns that reported information about educational assistance they provided their employees during 1992 through 1994; (2) employers filing returns varied in size, type of business, and amount of assistance provided; (3) large employers, those employing 250 or more employees, provided 99 percent of the dollar amount of the reported assistance to 98 percent of the employees who received it; (4) IRS data showed that about 900,000 employees received employer-provided educational assistance annually during 1992 through 1994, but few employees eligible for educational assistance under section 127 actually received it; (5) according to National Postsecondary Student Aid Study data, 74 percent of employees receiving educational assistance in academic year 1992 to 1993 were undergraduates, and about 64 percent of the undergraduates who identified their occupation were in clerical or technical occupations; (6) of employees receiving assistance who were graduate students and identified their occupation, about 89 percent were in professional, managerial, administrative, or teaching occupations; (7) generally, four tax provisions apply to employer-provided educational assistance; and (8) the major differences between section 127 and the three other provisions are related to the type of education supported, employee eligibility, limits on the value of assistance provided, and the ease of administration.