Unrelated Business Income FAQs
- What is UBI?
- UBI stands for Unrelated Business Income. The University of Florida, as a governmental unit, is not taxed on its income from an activity substantially related to the educational, or other purpose that is the basis for the organization’s exemption. For the University of Florida, higher education, research/scholarship, and service are the basis of its exemption related to its mission.
However, the University is required to pay Federal income tax on net income from activities deemed unrelated to the exempt mission i.e. Unrelated Business Income.
For more information see website.
- Isn’t the University exempt from Federal Income Tax?
- The University is exempt from Federal Income Tax as a public instrumentality of the State of Florida and is engaging in activities which include research and discovery, teaching and learning, outreach and public service. Any activities deemed unrelated to the mission of the University could be subject to Federal Income Tax.
- Why do I have to report UBI?
- It is required by the IRS. The IRS requires the University to file form 990-T annually to report any Unrelated Business Income. The annual UBI Questionnaire and Certification helps the University identify activities that may have taxable income and document the reason for potential exemption determinations, if applicable.
- What is unrelated business income tax (UBIT)?
- The calculated tax associated with unrelated business income. The federal tax rate applied is the corporate tax rate, currently 21%.
- What are some examples of activities typically subject to UBIT?
- Please review the website for examples of the activities subject to UBIT at http://www.fa.ufl.edu/directives/example-of-activities-unrelated-to-the-mission-of-uf/
- What are some examples of activities typically not subject to UBIT?
- Please review the website for examples of the activities not subject to UBIT at http://www.fa.ufl.edu/directives/example-of-activities-related-to-the-mission-of-uf/
- Are there any exceptions to or exclusions from UBI?
- The Internal Revenue Code (IRC) allows for certain exceptions, with most centering on passive income activities such as investment income, real property rental, or disposition gains and losses. The IRC also allows for specific exclusions related to volunteer workforces, convenience of members, donated merchandise and qualified sponsorships.
You can review exclusions here http://www.fa.ufl.edu/directives/ubi-exclusions/
- Where can I learn more about UBI?
- For more information, you can visit our Unrelated Business Income Tax website or IRS Publication 598 (https://www.irs.gov/pub/irs-pdf/p598.pdf)
UBI Certification Questions
- How do I know that I need to complete a UBI Certification form?
- An e-mail is sent by the Auxiliary/EBA office notifying selected departments to certify the fiscal year activity for their unit.
For new activities or those with revenue reported in a different cost center than the in previous year, the notification email includes a report showing Departments and GL Accounts specifying all revenues to be certified for the new fiscal year.
For recurring activities that were certified in the prior year and have revenue to certify in the new fiscal year, the email notification provides a link to the UBI Questionnaire and Certification.
- Where can the UBI Questionnaire and Certification be obtained?
- The questionnaire and certification can be found on the Auxiliary Accounting/EBA website under UBI Questionnaire and Certification or by using the link provided in the notification email.
- Who should fill out the UBI questionnaire?
- Staff with fiscal knowledge regarding the selected activity must complete the form.
- What if I am not the correct person to complete the UBI certification form?
Email the Auxiliary/EBA Accounting department to notify them that you are not the correct person to fill out the UBI certification (firstname.lastname@example.org). Or if you know the correct person, forward the certification email request to the correct person in the department
- Who should certify/approve the UBI questionnaire?
- An Unrelated Business Income Certification questionnaire must be certified by the Highest Accountable Administrator for the department. It is usually a Dean, Department Chair, or Director of the department.
- How many UBI Certification forms do I need to fill out? Can’t I just put all activities on one form?
- You will need to complete one UBI certification form for each activity in your selected department/account. For example, Lab Services and Teaching and Technology are separate activities and two forms would be completed, one for each separate activity.
If you have multiple activities in one account and have questions, please reach out to Auxiliary/EBA Accounting office for guidance at email@example.com or call (352) 294-7236.
- Last year, it was determined that my activity(s) were not subject to UBI. Do I have to fill out the questionnaire again?
- Yes, the UBI certification must be completed every year. There is a new electronic certification form that all selected departments must complete. The questionnaire can be accessed through our website.