IRS Tax issues
Tuition Exchange members should seek guidance from their own tax and legal professional advisers. For basic information consult www.IRS.gov Publication 970, Tax Benefits for Education.
Excerpts from Publication 970: "Qualified tuition reduction means a tax-free reduction in tuition provided by an eligible educational institution." ... "for education below the graduate level" ..."provided to the following individuals:"current employee, former employee who retired of left on disability, widow or widower of an individual who died while an employee, a widow or widower of a former employee who retired or left on disability, a dependent child or spouse of any person listed above."
It is important to note that graduate education is excluded unless it is provided "to a graduate student who performs teaching or research activities" and that the tuition reduction benefit "must not discriminate in favor of owners, officers, or highly compensated employees".