Sac State University Policy Manual

UNRELATED BUSINESS INCOME

Policy Administrator: Vice President for Administration
Authority: Internal Revenue Code, §513, Unrelated Trade or Business
Effective Date: Nov 16, 1999
Updated: Aug 1, 2007
Index Cross-References:
N/A
Policy File Number: ADM-0155


UNRELATED BUSINESS INCOME

This policy is designed to facilitate the timely and accurate completion of the Unrelated Business Income Tax Worksheet, which must be submitted to the Chancellor’s Office no later than November 15th of each year.

Unrelated business income is the gross income derived from any business that is regularly carried on, and not substantially related to the University’s exempt purpose or function. This Internal Revenue Code section was established to avoid unfair competition between non-profit organizations and for-profit, taxable entities, and to assess tax liability when non-profit organizations receive income unrelated to their exempt purpose.

Responsibilities
The Director of Auditing Services is responsible to ensure compliance with IRC §513, and CSU and University policies. Additionally, the Director of Auditing Services is responsible to complete and submit the Unrelated Business Income Tax (UBIT) Worksheet, which is reviewed and approved by the campus CFO.

Scope
This policy and the related procedures apply to all areas and members of the university. Any tax liability resulting from unrelated business income will be the responsibility of the department engaging in that activity.

In most cases, revenue-producing activities directly related to the university’s educational mission are not subject to UBIT. However, departments should notify Auditing Services of all revenue-producing activities. A review can determine whether the revenue is unrelated business income subject to taxation.

Procedures

The Unrelated Business Income Guidelines can be accessed at:

http://www.csus.edu/aba/audit/Documents/UBIT_Synopsis_for_Campus_Web.pdf

http://www.csus.edu/aba/audit/Documents/UBIT_Examples_Web.pdf

 

Approved by Alexander Gonzalez, President

September 29, 2007