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Policy Manual – Unrelated Business Income Tax
Section 710 Unrelated Business Income Tax
Last Revised: 7/15/96; 7/14/08
Responsible Office: Finance
Unrelated business income is income derived from any activity which is outside the mission of a tax-exempt entity. Unrelated business income is taxable if the income is from a trade or business, is regularly carried on, and does not substantially relate to the performance of an organization’s exempt purpose. Some unrelated activities that the University of Maine System (UMS) enters into may not impact local vendors. But other activities may directly compete with the community, and may be perceived as subsidized by the State of Maine and thus represent unfair competition.
The University of Maine System may engage in revenue generating activities considered to be an unrelated business or trade, but only after reviewing the sensitivity of the activities, the impact on the local community, and additional or unusual liability and tax issues. UMS will comply with Internal Revenue Service procedures for the reporting of unrelated business income and payment of associated taxes. Such activities will be self-supporting Auxiliary Enterprise operations with no tuition or State support involved.
The applicable campus chief financial officer will thoroughly document all aspects of proposed Unrelated Business Income Tax activity.
All requests to enter into unrelated business activities must then be submitted in writing and approved by the System Chief Financial Officer and Treasurer.
Administrative Practice Letter:
Section I – B: Unrelated Business Income Tax (UBIT)
IRS Form 990-T: Exempt Organizations Business Income Tax Return