The IRS imposes a tax called the unrelated business income tax (UBIT) on The University of Texas at Austin, as well as other exempt organizations. All revenue generating (or cost avoiding) activities conducted by a college, school, or unit (CSU) should be reviewed by the Tax Services UBIT team to determine if it is subject to UBIT. This is an involved process and depending on the complexity and type of activity, may take up to 10 business days or longer.
Departments do not need to delay the signing or execution of agreements while the activity is under UBIT review; payment of any determined tax is a business decision to be made by the department. However, we will always accommodate requests to review an agreement before it is executed.
To expedite the review process, please be sure the following information is included with the original email sent to the UBIT team requesting review:
- A copy of the agreement (signed version, if not available please explain why)
- The UT Austin contract number, if known
- A detailed description of how this activity contributes importantly to UT Austin (or the college, school, or unit), fulfilling its exempt mission. Please also provide the department’s mission statement and weblink where it is posted.
- A detailed description of how the price or amount charged for this activity was calculated. Is it intended to cover costs only or will it recoup costs plus a little extra (i.e., will the income exceed the expenses)?
- A detailed description of the frequency over the past fiscal year with which your college, school, or unit engages in the activity, or similar activities, that are the subject of this inquiry. (For example, if this request is about a conference that will be held by your unit, describe all other conferences held by your unit during the fiscal year.)
If the activity is determined to likely generate unrelated business taxable income (i.e., be subject to UBIT), a Non-Financial Questionnaire will need to be completed by the CSU. The UBIT team will instruct the CSU if this form is needed or not once the initial review process for UBIT is complete.
Further information on UBIT can be found in the Handbook of Business Procedures Part 5.4 and in UT System Policy UTS 103.
Any follow up information or questions should be sent to tax.ubit@austin.utexas.edu.