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FSU /  Controller's Office / Departmental Business Management Guide / Departmental Business Management Guide - Unrelated Business Income taxes (UBIT)

Departmental Business Management Guide - Unrelated Business Income taxes (UBIT)

Contents

 

Overview

Each fiscal year, the University is required to file an Exempt Organization Business Income Tax Return (Form 990-T) with the Internal Revenue Service. This filing reports any unrelated business income (UBI) generated by the activities of the University’s academic and support units. The Internal Revenue Code states, "A college or university is generally deemed to have UBI when it realizes income from any regularly conducted trade or business that is not substantially related to its exempt purposes."

The Controller’s Office Treasury Management department coordinates the preparation of the 990-T return and the Controller’s Tax Administration department oversees all University tax planning and related services. An annual review of departmental revenues in Auxiliary, Student Activity, and Athletic funds is conducted to determine the reportable amount of UBI. It is important that all unrelated business activities of the University are reported on the federal tax return in order to avoid costly penalties and interest charges for underpayment of taxes.

 

University Guidelines

University departments should be aware that the sale of certain goods or services may be subject to UBIT.

(Policy OP-D-2-B – Cash Management)

All revenue-generating contracts not under the purview of the Division of Sponsored Research, by which the University will gain a pecuniary benefit of $10,000 or more, must be reviewed by the University General Counsel and the University General Counsel and the Controller’s Office Tax Administration department. Among other considerations, this review will consider potential unrelated business income tax issues.

(Policy OP-D-3 – Revenue-Generating Contracts)

Additionally, the University reserves the right to seek reimbursement for any unrelated business income tax generated from departments.

 

Internal Controls

  • Ensure all revenue-generating contracts of $10,000 or more are authorized by University General Counsel and the Controller’s Office Tax Administration department.
  • Ensure all unrelated business income is reported to the Controller's Office Treasury Management department.
  • Ensure the proper recording of all revenues by specific categories and sources.

 

Departmental Responsibilities

  • Ensuring any new or existing business income is periodically reviewed to determine whether or not unrelated business income is being generated.
  • Ensuring departmental personnel responsible for reporting unrelated business income have been trained and are familiar with the types of income that should be included.
  • Completing the annual electronic UBIT survey distributed by Treasury Management as required.

 

Resources

 

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