Last year (2000) AKME learned that OUP (USA) is currently the subject of a complaint to the IRS (the Inland Revenue Service, the US tax authorities) made by one of OUP's tax-paying, academic publisher competitors. The substance of the complaint concerns various commercial sharp practices of OUP (USA), including the alleged 'cloning' of college textbooks (the mimicking of other publishers' courses with minor changes so as to avoid plagiary suits), the 'hijacking' of authors (covertly attempting to lure away other publishers' authors with promises of higher-volume sales and royalties) and the abuse of its tax-exempt privileges, notably the US dispensation of cheaper postal rates for charities, to undercut and even drive out of business its marketplace rivals. The aim of the complaint is to have the IRS, if necessary via the US courts, revoke OUP (USA)'s tax-exemption, and perhaps oblige it to pay back-taxes for the period during which its publishing operations have been indistinguishable from those of its commercial competitors. U.S. publishers and others who share this grievance-cum-cause are invited to contribute their views, case-histories and comments.
In May 2000, AKME was also sent photocopies of OUP's applications for its all-important American exemption. Under US law, every would-be charity has to re-apply for exemption each year. Reproduced in a separate file are facsimiles and transcripts of the key pages from OUP (USA)'s original application of 1972 and its recent one of 1997. Comparison of the two applications reveals that Oxford's former, already dubious, 37-line 'justification' has been whittled down to just a single sentence, which claims merely that its profits are "used to further academic excellence of Oxford University (a UK non-profit entity)".
Firstly, as explained in a professional US lawyers' Briefing Paper on the subject, this bald claim in no way justifies OUP (USA)'s exemption under US charity law. Secondly, it is in any case untrue. The claim implies that all of OUP (USA)'s profits are donated to Oxford University, when in fact the majority of them are spent on 'growing' the US business (often disreputably, as listed in the IRS complaint), while the majority of the remainder are held in OUP's UK 'General Fund' (in particular its 'Property and Reserve Fund'), used to expand OUP's various commercial publishing operations (e.g. takeovers) around the world. According to Oxford's own figures, on average only 10-12 percent of OUP (USA)'s annual profits are actually spent on or by Oxford University.
Lawyers will at once notice that, somewhat surprisingly, OUP (like CUP) sought and got its US tax-exemption five years before seeking similar exemption in the UK, where it had previously been refused, despite the obvious fact that the claimed beneficiary of this offshoot 'charity' is a British university. Both presses even cited their US exemptions as grounds for their UK applications. There seem to be two reasons, besides simply the greater financial importance of the US market, for this apparent oddity: first the American charity/tax regulations are somewhat laxer than the UK ones [see the lawyers' Briefing - linked below - and note, for example, the inclusion of 'literary' in IRS Reg. para. 501(c)(3)-1(c)(1)]; second, it may seem harder, from the US, for the IRS investigators to question the veracity of the presses' claims, for example that their surpluses are spent (by implication in their entirety) on their respective British universities.
Why has OUP (USA) over the years so reduced its slithering grounds for exemption? One reason, of course, may be that it has been advised by its lawyers that various of its early claims (e.g. about the unique educational quality of its books, or their methods of selection and editing, or the Delegates' control and non-remuneration) are no longer true, sustainable or relevant. Another reason may be provided by the strange case of the South African appeal (again, linked below). Whatever the truth, OUP (USA)'s present situation and 'justification' are patently now so fragile, they surely cannot last much longer, especially in view of the new (January 2001) judgment against OUP India. Tickle Humpty anyone?
Return to the top of this file, or...
OUP's Surprising "Charitable Status. The controversial 5th Appendix to The Remedy, with various further charitable links.
OUP (USA)'s tax-exemption applications, 1972 and 1997. Facsimiles and transcriptions of the relevant pages.
OUP (USA): Briefing Paper. A professional U.S. lawyers' analysis of relevant principles and case-law.
OUP's accounts.Includes the Delegates' Annual Reports and Financial Abstracts, 1994 - 1997, Bookseller digests, 1988 - 1999, statement of claimed donations to the University, and records of OUP's ever-swelling 'Property and Reserve Fund'.
NEW! Indian Revenue (income-tax) Department vs. Oxford University (Press) SOL case 053, 24th January 2001. The judgment of the Supreme Court of Appeal in India, by which OUP (India) has at last definitively lost its tax-exemption in that country, relating to claims dating back to 1973.
Income Tax Act, 1961, Section 10(22) exemption from tax - In
order to be eligible to claim exemption from tax under Section 10(22) of
the Act the assessee has to establish that it is engaged in some
educational activity in India and its existence in this country is not
for profit only - High Court rightly held that the assessee, Oxford
University Press, was not entitled to the exemption from the tax under
Section 10(22) of the Act.
The South African story. The gaga saga of an Oxbridge Chief Justice - Remnants of Empire?
The Waldock Report. Oxford University's own resonant 1970, pre-tax-exempt investigation into the workings of its Press.
CUP's Tax-exemption. Chapter 15 Charitable status recognised (1976) from M. H. Black's Cambridge University Press 1584-1984, published by CUP.
The Cuttings Library index. An archive of published articles about Oxbridge's fees/funding row of 1997, Oxford's Poetry fiasco of 1999, the recent elitism row, and sundry other Oxford and OUP scandals.
The Law Library index. A unique publishing law resource specifically designed for authors contemplating or conducting litigation against publishers. The library contains all relevant precedents, a series of articles by literary lawyer Nicola Solomon, and certain charity cases and materials related to the UPs' tax-exemption.
An Ultra Short Run (print-on-demand). An annotated, linked version of the Times Literary Supplement article of 18/6/99 on the latest publishers' sharp practice, in which OUP is yet again implicated (includes links to OUP's and CUP's licensed 'print-on-demand' website, to lists of their PoD authors and titles and other participating publishers, and to the related Bookseller correspondence).
Blood on the Sheets, an article about multinational publishers' "sheet-dealing" scams.
Various related published newspaper articles:
Oxbridge accounts reveal assets of £2 billion Sunday Times, 16/11/97
Mammon's Imprint, by Valentine Cunningham (+ leader comment and campaign), OUP fights corner in poetry row (includes CUP's donations to CU), US presses enjoy tax freedom, The Times Higher (Education Supplement), 12/2/99.
OUP to invest £87 million in university The Times (Business section), 17/7/99
OUP denies breach of charity rules The Oxford Times, 5/11/99
Cooking the books? Cherwell, 12/11/99
OUP profit row Cherwell, 25/2/00 plus revelations indicating that OUP's 'donations' to the University are in fact bogus.
Return to The Remedy + options
Return to the AKME index
e-mail: akme@btinternet.com