Unrelated Business Income Tax 2024 Mid-Year Reminder

Financial Services is reviewing unrelated business income (UBI) activity for the current fiscal year. Your department’s revenue-generating activity may be subject to unrelated business income tax (UBIT) if these three conditions are met:

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

As an integral part of the State of Arizona, the University is exempt from federal income tax when revenue is generated from activities that are substantially related to University exempt purposes, which include research and discovery, teaching and learning, and outreach and public service.

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.

Using the facts and circumstances of an activity, Tax Services will work with departments to provide guidance and assist with determinations regarding the applicability of UBIT. Additional information is available on the UBIT Tax Services web page.

Departments with activities determined to be UBI are responsible for providing the fiscal year’s UBI and associated expenses to Tax Services by the last business day of August, which is Friday, August 30, 2024.

If you believe your department has UBI activity, or if you are unsure and have questions, please complete a UBIT Questionnaire and contact Tax Services at FNSV-Tax-Services@arizona.edu or 520-621-1957.