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Are Private Nonprofit Colleges And Universities In Compliance With Unrelated Business Income Regulations?
Bedard, Danielle Bedard, Danielle
Bedard, Danielle
Bedard, Danielle
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Abstract
Nonprofit status is granted to entities organized for a charitable, educational, religious or scientific purpose. Nonprofits are not liable for income tax on their revenues as long as the revenues are related to their core mission. As colleges and universities struggle in an era of declining resources they often seek alternate streams of revenue; some of these look more like businesses and less like nonprofits. This created the question: are nonprofit colleges and universities complying with the unrelated business income (UBI) laws and regulations? The Internal Revenue Service (IRS) audited a sample of thirty-four college and universities and found that 90% of them were underreporting their UBI. UBI is income generated from any activity that is not related to a nonprofit institutionÕs core mission. Some examples of these activities are: selling clothing, receiving revenue from a fitness center, and offering sports camps over the summer. This study evaluated tax returns from a randomized sample of forty private higher education institutions to determine whether they were compliant with IRS regulations. Several data points were examined to assess the validity of the institution's income reported.
Title
Are Private Nonprofit Colleges And Universities In Compliance With Unrelated Business Income Regulations?
Date
2018-01-01
Subject
unrelated business income
UBI
unrelated business taxable income
UBIT
nonprofit higher education
unrelated business activities
UBI
unrelated business taxable income
UBIT
nonprofit higher education
unrelated business activities
Material type
Collections
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Abstract
Nonprofit status is granted to entities organized for a charitable, educational, religious or scientific purpose. Nonprofits are not liable for income tax on their revenues as long as the revenues are related to their core mission. As colleges and universities struggle in an era of declining resources they often seek alternate streams of revenue; some of these look more like businesses and less like nonprofits. This created the question: are nonprofit colleges and universities complying with the unrelated business income (UBI) laws and regulations? The Internal Revenue Service (IRS) audited a sample of thirty-four college and universities and found that 90% of them were underreporting their UBI. UBI is income generated from any activity that is not related to a nonprofit institutionÕs core mission. Some examples of these activities are: selling clothing, receiving revenue from a fitness center, and offering sports camps over the summer. This study evaluated tax returns from a randomized sample of forty private higher education institutions to determine whether they were compliant with IRS regulations. Several data points were examined to assess the validity of the institution's income reported.
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Course
Department
Management
Degree
Bachelor of Science (BS)