Unrelated Business Income Tax (UBIT) Reminder

Submitted on Wed, 07/29/2020 - 9:21 am

Financial Services is gathering information for the FY 2020 Unrelated Business Income Tax (UBIT) filing. The University of Arizona is exempt from federal income tax as an integral part of the State of Arizona when revenue is generated from activities that are substantially related to the University’s exempt purposes which include research and discovery, teaching and learning, and outreach and public service.

However, revenue generating activity may be subject to federal UBIT when these conditions exist:

  • Activity is a trade or business
  • Activity is regularly carried on, and
  • Activity is not substantially related to the University’s exempt purposes

Per IRS Publication 598, assessments and correction penalties apply to UBIT returns in the same manner as other tax returns. Therefore, if an activity is retroactively found to be subject to UBIT, the home department will be responsible for providing funds to cover the corresponding tax liability, plus any applicable interest and penalties.

If you believe your department has UBI activity, or you are not sure, please complete a UBIT Questionnaire and contact Tax Services at taxservices@fso.arizona.edu or 520-621-1957.

As the facts and circumstances of the activity determine if the income is considered UBI, Tax Services will work with departments to provide guidance and assist with determinations. Additional information is available on the Tax Services web page.