The University of Nebraska System, including the University of Nebraska-Lincoln, is exempt from federal and state income tax on income earned from activities that relate to our educational and research missions. However, Unrelated Business Income Tax (UBIT) may be imposed on any unrelated business income earned.
According to Internal Revenue Service Publication 598, unrelated business income is the income from a trade or business regularly conducted by an exempt organization and not substantially related to the performance by the organization of its exempt purpose or function. The organization's use of the profits derived from this activity does not, alone, make the activity substantially related to the performance by the organization of its exempt purpose or function.
The determination of Unrelated Business Taxable Income (UBTI) is based on all of the facts and circumstances. If an item of income is determined to be UBTI, there are modifications, exclusions, and exceptions that could potentially exclude the income from tax.
The University of Nebraska System submits a consolidated Federal Form 990T: Exempt Organization Business Income Tax Return and Nebraska Form 1120N that combines unrelated business income for all four campuses. Tax is assessed based on this consolidated tax returns.
Please refer to the University of Nebraska System’s Tax Department website and Unrelated Business Taxable Income (UBTI) Definitions, Exceptions and Examples for additional guidance.
UBIT Process Timeline
| When | Who | What |
|---|---|---|
| As Needed | Departments | Inform Accounting when new UBI operation is started |
| Early November | Accounting | Sends email to departments with UBI requesting necessary information for tax filing for the previous fiscal year. This information varies based on the type of operation but typically includes revenue, expense, space information, FTEs, etc. |
| November 30 | Departments | Submit requested information to Accounting. |
| December through Early March | Accounting/ Departments | Accounting reviews submitted information, makes additional inquiries of departments, and prepares final calculations. |
| Early March | Accounting | Accounting submits UNL UBI calculations to the Tax Department at the Office of the President. |
| March through May | Office of the President | The Tax Department at the Office of the President prepares and submits the consolidated University of Nebraska System tax returns. If tax is due, JE will be posted to charge relevant departments. |
For additional questions, please email Stephanie Ninneman, Senior Financial Accountant.