Rep. Kern asks for A.G. opinion on scholarship taxation, Tulsa attorney rebuts assertion in story

By Patrick B. McGuigan

Published 26-Jan-2011

State Rep. Sally Kern has asked Attorney General Scott Pruitt for a formal opinion concerning assertions by some public school officials that scholarships supporting special needs scholarships are subject to federal taxation.

Meanwhile, an attorney with the controversial Tulsa law firm of Rosenstein, Fist and Ringold has directly rebutted the conclusion reached in a CapitolBeatOK news story that the firm was “apparently” directing public school clients to tell parents they faced such taxation.

In her letter to Pruitt, dated yesterday (Tuesday, January 25), Rep. Kern wrote:

“I would like to request an opinion concerning an issue that has arisen because of the Lindsey Nicole Henry special needs scholarship Bill.

“It has come to my attention that school districts are asking for W-9s from the parents of the students using this scholarship. This scholarship money should be non-taxable.

“I request an official opinion on the following two questions:

1)   Is this scholarship money taxable?
2)   Does a school district need to send a W-9 to the parents utilizing this scholarship?

“I respectfully ask that you publish an opinion as soon as possible as these school districts seek to confuse and raise doubts about the program in the minds of parents and these parents are preparing to file their taxes in the near future.”

Today, CapitolBeatOK received an email from Rosenstein Fist Ringold. CapitolBeatOK appreciates the information received. The email reads as follows:

“My name is Jerry Zimmerman and I am the tax partner with the law firm of Rosenstein, Fist and Ringold (‘RFR). I had an opportunity to read your article that was published on Jan 25th in CapitolBeatOK, with respect to the taxation of the Lindsey Nicole Henry Scholarships. I am also making the assumption in responding, that RFR is the controversial law firm to which you refer in your article.

“Please allow me to provide you with the facts. When RFR has been requested by its school district clients to analyze the tax reporting matters concerning the scholarships, the task of responding to those requests has been assigned exclusively to me.

“In fact, I have specifically and unambiguously advised the school districts that have requested advice, that the school districts are NOT required to issue forms 1099 to the recipients of the scholarships. We have never been asked by any of our clients to issue an opinion, nor have we ever rendered an opinion, as to whether the receipt of the scholarship proceeds is a taxable event. I suspect that we have not been asked to issue such an opinion because our clients are the school districts as opposed [to] the recipients of the scholarship awards.

“As such, our clients have asked about their respective duties to report or forbear from reporting the issuance of the scholarship proceeds. I appreciate your article and I thought that it was incumbent on me to advise you of the facts. Very truly yours, Jerry Zimmerman.”