As tax exempt entities, UNT and UNT System Administration are required to file annual income tax returns (IRS Form 990-T) for any "unrelated business income." The below information is intended to answer questions related to this important topic.
What is Unrelated Business Income?
The Internal Revenue Service (IRS) defines any income that is: 1) from a trade or business, 2) regularly carried on, 3) and not substantially related to the organization's exempt purpose, to be "unrelated business income." The fact that the revenue is used for related purposes is not relevant to determine whether the revenue is related or not. Generally, this would involve any income that is not derived from education or research activities, although there are exceptions to this. The IRS also provides exclusions for some types of income that would otherwise be considered unrelated.
Examples of Exclusions:
Specific examples of exclusions involve activities involving a volunteer workforce; goods and services provided for the convenience of the faculty, staff, and students of UNT; qualified sponsorships; and sales of donated merchandise. Other types of income such as dividends, interest, royalties, rents from real property, and income from research are also generally excluded with some exceptions.
What is UBIT?
UBIT stands for Unrelated Business Income Tax. It is a tax imposed on unrelated business income that is generated by tax-exempt entities.
What if I think my department generates revenue (other than ordinary tuition and fees)?
You should complete and submit the electronic version of the Unrelated Business Income Tax Questionnaire form. Please complete this form for any potential unrelated income generated by your department. The UNT System Business Service Center Tax Accountant will review the completed questionnaire and determine if the income is considered unrelated business income for tax purposes.
If you have any questions related to the questionnaire, contact UNT System Business Service Center at email@example.com.
What should I do if my department has unrelated business income?
If it is determined that the income in question is, in fact, unrelated business income based on the IRS criteria, you will be required to send a report of that income and all related expenses to UNT System Business Service Center no later than February 28, 2018, reporting the prior fiscal year's September 1 through August 31 income.
UNT and UNT System Administration are required to file an annual income tax return (IRS Form 990-T) for any "unrelated business income" generated during the fiscal year from September through August. It is important that the annual return is accurate and complete or the entity could incur a penalty. The UNT System Business Service Center Payroll area is responsible for filing this return. However, it is the responsibility of those departments that have unrelated business income to ensure that the proper reports are sent to UNT System Business Service Center Payroll by the November 15 deadline.
If you have any questions related to the questionnaire, contact us at firstname.lastname@example.org.
Click here to go to the Unrelated Business Income Tax Questionnaire form.