As tax-exempt entities, UNT System member institutions are required to file annual income tax returns (IRS Form 990-T) to report "unrelated business income." The information below is intended to answer questions related to this important topic.
What is Unrelated Business Income?
The Internal Revenue Service (IRS) defines unrelated business income as any income: 1) from a trade or business, 2) regularly carried on, 3) not substantially related to an organization's exempt purpose. The fact that revenue is used for related purposes is not relevant to determining whether income is related. Generally, unrelated business income is any income that is not derived from education or qualifying research activities, with some exceptions.
In some cases income that a tax-exempt entity derives from unrelated sources, is not subject to reporting due to IRS exclusions and exceptions.
Examples of Exclusions:
Specific examples of exclusions include activities conducted substantially by a volunteer workforce; situations where goods and services are provided for the convenience of the faculty, staff, and students; 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)?
UNT departments 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 Controller and Tax Departments will review the completed questionnaire and determine if the income is considered unrelated business income for tax purposes.
UNTHSC, UNT at Dallas, and UNT System, separately send out their Unrelated Business Income Tax Questionnaires. UNTHSC, UNT at Dallas, and UNT System Departments should not complete the linked questionnaire above.
If a department has any questions related to unrelated business income or the questionnaire, they should contact the Tax Department 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 no later than January 31, reporting the prior fiscal year's September 1 through August 31 income.
UNT System member institutions 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 applicable entity could be subject to penalties. It is the responsibility of each department that has unrelated business income to ensure that the proper reports are submitted as requested by the November 15 deadline.
If you have any questions related to the questionnaire, contact us at firstname.lastname@example.org.