The completed certification and questionnaires for FY23 are due to inttax@gmu.edu by November 15, 2023
Fiscal Services has designed a questionnaire to gather information about new and existing activities that potentially generate Unrelated Business Income (UBI) and may need to be included on the university’s IRS Form 990-T for each Fiscal Year. UBI results from a trade or business that the university regularly carries but is not substantially related to our tax-exempt purpose of education, research, and service. The questionnaire is designed to walk you through the UBI analysis in a simple Q&A format.
General Guidance for Unrelated Business Income Tax (UBIT)
George Mason University is exempt from taxation under Section 115 of the Internal Revenue Code. However, the university is required to pay Federal income tax on net income from activities unrelated to the exempt mission of the university: education, research and public service. It is important that all unrelated business activities of the university be reported on the Federal tax return. The Internal Revenue Service can assess costly penalties and interest for underpayment of taxes.
Annually, each department should complete a separate questionnaire form for each potential unrelated activity, including those historically reported, for the fiscal year that just ended (July-June yearly). Once completed, the department’s senior fiscal manager should review, certify, and submit the certification and supporting questionnaires to inttax@gmu.edu. If there are business activities you are unsure about, please contact us at inttax@gmu.edu.
Each College, Department, Center, and Institute must also segregate their accounting for corporate sponsorship agreements. Please keep in mind that there may be both gift and taxable corporate sponsorship components of this income, depending on the terms of the contract.
Criteria
The following three elements must be considered when determining if an activity may be subject to unrelated business income tax (UBIT).
The activity must:
- Be conducted as a trade or business, AND
- Be regularly carried on by the university, AND
- Not be substantially related to the university’s tax-exempt purpose.
Trade or Business: Includes any activity carried on for the production of income from selling goods or performing services. Generally, a trade or business has a profit motive.
Regularly Carried On: UBIT applies only to a business activity that is regularly carried on, as opposed to transactions that are only sporadic or infrequent. An activity is considered regularly carried on if it is conducted with a frequency and manner comparable to a similar activity conducted by a for-profit (taxed) business.
Not Substantially Related: The activity must not be substantially related to the exempt mission of the university. To decide if an activity is related or unrelated, determine the nature of the activity and how essential it is for accomplishing the mission of the university including education, research and public service.
For additional information and examples of related and unrelated activities please see the UBI Guidelines.
UBI Questionnaire and Certification
The UBI Questionnaire must be completed by the department annually. Consult the UBI Guidelines to determine if the business activity is unrelated and must be reported. Once all UBI activity has been entered into the Questionnaire, prepare a summary of activity using the UBI Certification document. A senior fiscal manager for the college/department must sign and date the UBI Certification and submit the form to intlacct@gmu.edu.