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UBIT Unrelated Business Income Tax

UBIT Unrelated Business Income Tax. Thursday, September 11, 2014. Overview.

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UBIT Unrelated Business Income Tax

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  1. UBITUnrelated Business Income Tax Thursday, September 11, 2014

  2. Overview The University of Maryland is generally considered to be tax-exempt under IRS Code Section 115. However, the University must file and pay taxes on any income that is earned by an activity regularly operating as a trade or business that is intended to make a profit and is not related to accomplishing the mission of the University. This tax is referred to as Unrelated Business Income Tax (UBIT).

  3. Identifying UBIT

  4. Statutory Exceptions that Exempt Activities/Income as Unrelated Royalties Research Substantially Related Convenience

  5. Need for Change: Drivers IRS Compliance Survey & Examinations USM requirement for VP Attestation UMCP Best Practices & Review

  6. IRS Colleges & Universities Compliance Project Survey was sent to 400 Colleges & Universities Examined 30+ institutions and 100+ filings Made over 180 changes Increased UBI by $90M with 90% of institutions having underreported UBI Disallowed $170M in losses with 75% of returns examined having disallowed losses More examinations to follow!!

  7. IRS Compliance Survey IRS Report on Unrelated Business a Wake-up Call for Colleges & Universities http://www.claconnect.com/Nonprofits/IRS-Report-Unrelated-Business-Wake-Up-Call-Nonprofit-Colleges-Universities-Form-990-990-T.aspx

  8. Attestation Performed a review of institutional activities that might potentially generate UBI Assessed AND documented, for determination whether tax reporting is required, the business-purpose of activities that might potentially generate UBI Compiled financial information for each UBI activity and documented the information sources and any allocation of expense Signed by VP for Finance and Administration

  9. Future Changes for UMCP Best Practices Immediate Questionnaire Only Longer Term KFS enhancements Post review Outreach/Training Survey Distribution Set up of reserve Tax counsel recommendations

  10. Distribution & Deadlines Distribution - September 15th Questionnaire Deadline – October 10th UBI Financial Schedules Deadline – October 24th

  11. UBITUnrelated Business Income Tax Questions? SUGGESTIONS…

  12. Contact Us For additional information regarding this presentation, please contact: • Trina Tanner • (301) – 405-2633 • tannert@umd.edu • Colleen Dove Auburger • (301) – 405-6777 • cdove1@umd.edu • Kathy Moody • (301) – 405-2595 • krichar5@umd.edu Thank you!

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