UMB is required by law to report all Unrelated Business Income (UBI) to the IRS, via the USM Office.
An activity is considered "Unrelated" by the IRS and therefore subject to tax when it meets all three of the following criteria.
- The activity is a trade or a business.
- The activity is regularly carried on.
- The activity is not substantially related to the exempt purpose of the organization.
If an activity is undertaken with the intent to generate net income through the sale of goods or services, it is considered a trade or business.
An activity is regularly carried on unless it is performed infrequently or discontinuously.
An activity is not substantially related when it does not contribute to the exempt purpose of the university, other than through the production of funds.
Annual information requests are sent to each school’s dean administrator office, the Research and Development office, and the Parking and Transportation Office. A UBIT financial report is compiled and sent to the USM Office for reporting to the IRS.
There are exemptions for unrelated activities such as ordinary investment income and rental income. See the USM Guidance for more information.
Please contact Bryan Mack at bmack@umaryland.edu with any questions or if you are aware of income that may be considered an unrelated business.