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Policy Title: Unrelated Business Income Tax

Policy Administrator: Vice President for Administration/CFO

Authority: Internal Revenue Code, ยง513, Unrelated Trade or Business; ICSUAM 3801.01, Tax Administration

Effective Date: 12/19/17

Updated:

Index Cross-References:

Policy File Number: ADM-0155

 Unrelated Business Income Tax 

Policy Statement:

This policy is designed to facilitate the timely and accurate completion of the Unrelated Business Income Tax (UBIT) worksheet, which must be submitted to the California State University (CSU), Chancellor’s Office by the end of January 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.

Who the Policy applies to:

The policy applies to all areas and members of the University that participate in revenue generating activities. 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 Accounting Services of all revenue-producing activities. A review can determine whether the revenue is unrelated business income subject to taxation.

Why the Policy is necessary:

The policy is necessary to be in compliance with the Internal Revenue Code, §513, Unrelated Trade or Business and ICSUAM Policy 3801-01.

Responsibilities:

The University Controller is responsible to ensure compliance with IRC §513, and CSU and University Policies. Additionally, the Tax and Compliance Specialist is responsible to complete and submit the UBIT worksheet, which is reviewed and approved by the campus Chief Financial Officer.

Procedure: 

UBIT Guidelines

UBIT Examples

Approved by:  Robert S. Nelsen, President       Date: Janurary 29, 2018