Unrelated Business Income
The University is tax-exempt as an instrumentality of the State of Georgia under Section
115 of Internal Revenue Code and is exempt from federal income tax when engaging in
activities which further the instruction, research and public service mission of the
institution. However, the University is not exempt from income tax imposed on activities
which are substantially unrelated to those exempt purposes, even though these activities
may generate income to support the University’s purpose and mission related activities.
As defined by the Internal Revenue Service, an activity will have unrelated business
income and be subject to unrelated business income tax if it meets three requirements:
- A trade or business – any activity carried on for the production of income from selling goods or performing services;
- Is the activity regularly carried on – any activity that shows a frequency and continuity and is pursued in a manner similar to comparable commercial activities of nonexempt organizations; and
- Is the activity unrelated to the University’s exempt purpose – the activity does not contribute importantly to accomplishing the University’s exempt purpose.
However, there are exceptions to these requirements and in some situations, determination of whether or not the activity generates unrelated business income will be case specific.
If you have specific questions about unrelated business income, please contact the Accounting Department at 706-542-1197 and speak with either Celise Elder or Allison Davis.