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Audits Uphold Soka's Tax-Exempt Status : University: Hayden criticizes investigations by IRS, state Tax Franchise Board and wants expanded inquiry.


SACRAMENTO — The U.S. Internal Revenue Service and the state Franchise Tax Board have concluded that Soka University of Calabasas did not violate its tax-exempt status, prompting state Sen. Tom Hayden (D-Los Angeles) to call Wednesday for a broader inquiry.

The federal and state tax agencies launched an investigation of Soka University, which provides English language instruction for Japanese students, in response to Hayden's initial request nearly two years ago.

In a letter to Soka officials, an IRS district director said the agency's audit determined that because the university has a "racially nondiscriminatory admission policy" no change to its tax-exempt status is needed.

The letter did, however, scold administrators, saying: "You failed to make your racially nondiscriminatory policy known to all segments of the general community served by the school." Soka then corrected this problem by publicizing the policy in a general circulation newspaper, the letter noted.

Following suit, the California Franchise Tax Board told Soka by letter that "based on the IRS letter, no change to exempt status" on the state level was necessary.

For years, the university, nestled in the bucolic foothills of the Santa Monica Mountains, has been at the center of controversy, with federal officials trying to obtain part of its campus for parkland, and neighbors complaining about what they see as links to a religious sect in Japan.

But Jeff Ourvan, Soka's director of community relations, said Wednesday the school has been mischaracterized and is merely a budding institution of higher learning, complete with research ties to Harvard University.

Of the probe's outcome, Ourvan said, "We're pleased that our integrity is intact and that we've been recognized as a bona fide institution of higher education."

Ourvan said Soka University is expanding its curriculum and filed an application last week seeking state approval of a master's degree program to teach foreign language instructors.

Hayden's chief of staff in Sacramento, Duane Peterson, said the legislator will appeal the taxing agencies' decision as too narrow.

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