To: Deans, Directors, and Department Chairs, University Business Managers
From: Aimee Turner, Executive Dir., Enterprise Financial Accounting and University Controller
The University Controller’s Office is responsible for compiling unrelated business income (UBI) each fiscal year for inclusion on the University’s Form 990‐T filed annually with the Internal Revenue Service.
Unrelated business income may be generated if goods or services are sold to external customers that are not part of the university campus, i.e., students, faculty, staff and other University departments. When an activity is conducted with external non-University customers, the department conducting the activity is required to complete Finance Form 712.1.1f, UBI Tax Compliance Questionnaire. This questionnaire is the primary tool used by our office in determining the taxable status of the activity – whether the net income generated should be reported as unrelated business income (per Finance Procedure 712.1, Reporting Unrelated Business Income).
Revenues generated from sales to external non-University customers may generate unrelated taxable income when the activity constitutes a regularly carried on trade or business that is not substantially related to the University’s educational mission. To determine “relatedness,” the Internal Revenue Code focuses on the nature of the activity. A university unit or department is not prohibited from engaging in activities which are determined to generate unrelated business income, but is required to report net operating results, fiscal year revenue and expenses, for an unrelated business activity. The University policy regarding UBI can be found in Finance Policy 712, Unrelated Business Income.
Please complete a separate questionnaire for each income‐producing activity conducted by the department where external non-University customers are involved (unless a form for an activity was submitted in the past and nature of the activity and purpose has not changed) and return the completed questionnaire to Thomas Schneeberger, Assistant Director of Financial Reporting, either to CB # 1270 or by email at firstname.lastname@example.org. If you have any questions, please call Thomas at 919-962-1362 or contact him by the previously noted email address.