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Sec. 1 Annual Form 990-T
The University of Texas System (U. T. System) must file an IRS Form 990-T Exempt Organization Business Income Tax Return to report tax on its Unrelated Business Income (UBI) each fiscal year.
Sec. 2 Institutional Tax Coordinator (ITC)
Each U. T. System institution’s chief business officer must appoint and notify the Office of General Counsel (OGC) and the Office of the Controller (Controller) of the individual serving as the ITC.
Sec. 3 Unrelated Business Income Tax Non-Financial Questionnaire (NFQ)
A completed NFQ is required to determine whether or not an activity should be reported to the IRS on U. T. System Form 990-T. Each ITC must submit a NFQ for each New Activity that generates revenue.
3.1 Each section of the NFQ must be completed with relevant documents and agreements attached. The ITC should consult with departmental personnel possessing relevant knowledge concerning an activity when gathering the information necessary to complete a NFQ.
3.2 The NFQ will be submitted within 60 days of the start of a New Activity but not later than August 31st of the fiscal year in which the activity was started or changed.
3.3 The NFQ must be submitted via the U. T. System Tax SharePoint site which is maintained by the Office of the Controller.
Sec. 4 Determination by OGC
OGC shall review each NFQ to determine if the activity is related (i.e., exempt) or unrelated (i.e., taxable). Only OGC may determine if an activity is related or unrelated. OGC shall notify the ITC and Controller of its tax determination for each NFQ.
Sec. 5 Unrelated Business Taxable Income Transmittal Certification Letter (TCL)
The purpose of the TCL is to certify that information provided by each institution to the Controller is accurate, complete, and complies with this policy. Each institution shall send a TCL signed by the chief business officer and ITC (without authority to delegate) to the Controller with a copy to OGC by January 15th of the fiscal year that ended August 31. The TCL certifies the following:
5.1 NFQs for the fiscal year were completed and submitted via SharePoint for OGC review.
5.2 A separate Financial Worksheet was submitted for each New Activity determined by OGC to be unrelated in the fiscal year;
5.3 A separate Financial Worksheet was submitted for each Existing Activity that continued to generate revenue during the fiscal year;
5.4 A Financial Summary of Unrelated Revenues, Expenditures, and Indirect Costs Worksheet for all New Activities determined to be UBI and Existing Activities for the fiscal year was attached to the TCL; and
5.5 A list was provided of each Existing Activity reported in previous fiscal years that ceased operations or did not generate revenue in the current fiscal year.
Sec. 6 Financial Worksheets
Financial worksheets must be completed and submitted by January 15th for the fiscal year that ended August 31 for all New Activity determined to be UBI and/or Existing Activity for which the UBI activity did not cease or OGC issue a superseding determination that the activity is related.
Sec. 7 Payment of UBIT
UBIT due on a U. T. System Form 990-T shall be allocated to each institution in proportion to that institution’s contributing unrelated business taxable income after considering the institution’s loss carryforward.
Sec. 8 Form 990-T Preparation
The Controller shall be responsible for preparing and filing the U. T. System Form 990-T.
Existing Activity – an ongoing activity started in a prior fiscal year that OGC has determined to be UBI.
New Activity – an activity that generates revenue (1) for the first time in a fiscal year, or (2) which has changed its mode or scope of operations subsequent to the originally submitted NFQ.
Institutional Tax Coordinator – U. T. System institution appointee that acts as a liaison with Controller.
Unrelated Business Income – income from a trade or business, regularly carried on, that is not substantially related to the exempt purpose of U. T. System and its institutions.