Educational Materials
Sales to students, faculty, and other employees of items that are directly related to University educational purposes are not subject to unrelated business income tax (UBIT). Such sales include books, general school supplies (i.e. notebooks, paper, pens, and pencils) and athletic wear used in the school’s athletic and physical education programs.
For computers and related products, there must be direct evidence that such sales enhance the computer literacy of faculty, staff, and students. The IRS guideline states that while the sale of a single computer to a student or faculty member is not taxable, sales of multiple computers to such individuals and sales of a single computer to alumni and members of the general public may be subject to UBIT.
Non-Educational Materials
The sale of non-educational materials to the students, faculty, or staff of the University may or may not be subject to UBIT based on the convenience exception. Any sales to non-members (e.g., the general public) are taxable unless the sales are not regular.
Non-educational items that may fall under the convenience exception when sold to University members include items that are low in cost and in recurrent demand. Qualified items include clothing embossed with the University insignia, clothing used in University sports and activities, low-cost apparel, novelty items (e.g., jewelry, beer mugs, pillows) imprinted with the University name or seal, and low-cost items with recurrent demand (e.g., cards, health and beauty aids, candy, and magazines).
However, the convenience exception does not apply to items with a useful life of more than one year, unless it is a logo novelty item or logo clothing.