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What is considered unrelated business income and does my organization need to pay taxes?

Even though your organization is tax exempt, you may still be liable for taxes on certain income, 被称为 unrelated business income (无论在哪里). 

What is considered unrelated business income?

For most organizations, an activity is an unrelated business if it meets three requirements:

  • It is a trade or business - meaning the activity is carried on for the production of income from selling goods or services. 
  • It is regularly carried on - these are activities that show a frequency and continuity
  • It is 不 substantially related to furthering the exempt purpose of the organization - activities that generate the income and do contribute importantly to accomplishing the organization's exempt purposes to be substantially related 

有几个 modifications, exceptions, and exclusions to the general definition of 无论在哪里T, including business activities involving volunteer labor, donated merchandise and others. 

What does my organization need to do if we make an income from unrelated business?

An exempt organization that has $1,000 or more of gross income from an unrelated business must file Form 990-T in addition to your Form 990, 990 - ez或990 - pf. An organization must pay estimated tax if it expects its tax for the year to be $500 or more.

What are some examples of unrelated business income?

  • 案例# 1 - An arts organization owns a building and a parking lot. The parking lot is primarily used in the evenings and weekends for the organization's events. The organization recognizes the opportunity to earn revenue by opening the parking lot up to individuals for paid parking during the weekdays. Although the income from the parking lot helps fund the organization's various programs, it is 不 directly related to the mission and purpose. The income generated from the parking lot IS considered unrelated business income and subject to unrelated business income tax (无论在哪里T). 
  • 案例# 2 - A history museum charges an entrance fee for visitors. The museum is open year-round for visitors to learn about the history of the town and county. Even though the activity is regularly carried out, the business activity is directly related to the purpose of the organization, 因此, 收入是 considered 无论在哪里 and is 不 taxable. 
  • 案例# 3 - An animal welfare organization dedicated to educating the public on proper pet ownership and care, among other purposes, has a shop in its animal shelter. The shop sells leashes and collars, food and water bowls, and animal 培训 videos. Because the business activity of buying the animal related items is directly related to the organization's mission, the income generated is 无论在哪里. 

Please 不e that these are examples, and various details and activities may change the classification of income generated. If you have any concerns about your organization's business activities as 无论在哪里, please consult legal counsel. 

Additional 资源

国税局598年出版 - Find specific information about 无论在哪里T. You'll also find several examples. 

Pro Bono Legal Group (PBLG) - If you have uncertain of your business activities and earned revenue, smaller organizations may submit a pro bono legal request to our PBLG. Your request will be sent to a group of volunteer lawyers who may volunteer to assist your organization. Please 不e that there is no guarantee of placement with an attorney. 

Hurwit & 的同事 - Find additional information, including exclusions. 

 

 

Topics of Interest: 
Financial Management

免责声明

这些文章, 样品, and resources are offered for informational purposes only and should 不 be construed as professional advice. 如果使用, your organization should tailor 样品 to best fit the organization’s specific circumstances. We encourage your organization to seek appropriate professional assistance as needed.

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