Report Unrelated Business Income (UBI)

Policy Statement

Federal and state Unrelated Business Income (UBI) tax is imposed on tax-exempt organizations when they engage in business activities unrelated to the organization's tax exempt purpose as defined by Internal Revenue Code Section 115 and Section 501(c)(3).

Regardless of fund type, units must track their related and unrelated income and expenses and report them annually to University Accounting and Financial Reporting (UAFR).

Consult Tax Compliance and Analysis at 217-244-8359 to help you determine whether your activity will generate UBI. Consult Section 18.13 - Unrelated Business Income Tax (UBIT) to learn how the determination is made, before following this procedure.

Procedure

To report unrelated business income (UBI):

1. Once Tax Compliance and Analysis determines that your activity generates UBI, notify UAFR at UAS@uillinois.edu:
• That UBI will be generated.
• The activity start date.
• The Banner C-FOAPAL string that accounts for the activity.
2. Following the close of fiscal year-end, UAFR notifies your unit that you must report UBI for the year that has just closed. The notification includes a spreadsheet containing total revenue and expenses for your activity as of fiscal year-end.
3. Enter your unit's UBI information into the spreadsheet and submit it to UAFR by the deadline given, by reply to the email that contained the spreadsheet.

Related Policies and Procedures

Section 18.13 - Unrelated Business Income Tax (UBIT)

Additional Resources

Self-Supporting FAQs
Internal Revenue Code Section 115
Internal Revenue Code Section 501(c)(3)

Last Updated: March 2, 2020 | Approved: Senior Associate Vice President for Business and Finance | Effective: January 2013