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The University of Utah has a dual status for federal income tax purposes, recognized under both:

  • IRC Section 115 – As a state or political subdivision entity, exempting income earned from performing its essential governmental functions
  • IRC Section 501(c)(3) – As a public, nonprofit organization dedicated to educational and charitable purposes, allowing it to receive tax-deductible donations
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  • Implications of Dual Status

    Federal Income Tax: Revenue from activities directly related to the University’s educational and research mission is exempt.

    Donations: Gifts to the University may be tax-deductible.

    Unrelated Business Income (UBI): Revenue from non-mission related activities may be subject to Unrelated Business Income Tax (UBIT).

    Return Filings and Information Reporting: The University complies with IRS reporting requirements and maintains documentation of its exempt status.

  • Compliance & Oversight

    Tax Services & Payroll Accounting is responsible for administering federal and state tax compliance and overseeing tax-related matters at the University of Utah.
    • Maintaining the University’s federal tax-exempt documentation
    • Ensuring timely and accurate informational reporting and tax return filings
    • Evaluating activities for potential exposure to unrelated business income tax
    • Responding to IRS inquiries and audits
    • Conducting tax research

  • Federal Return Filings

    Form 990
    An annual informational return typically required of organizations exempt under IRC Section 501(c)(3). It includes financial and operational details and must usually be publicly available. IRC Section 115 entities are excluded from this requirement. The University of Utah qualifies under both IRC Section 115 and 501(c)(3). As allowed by Treasury Regulation §1.6033-2(g)(1)(v), it is not required to file Form 990 and therefore does not produce this document.
    Form 990-T
    A federal tax return used to report and pay tax on Unrelated Business Taxable Income (UBTI) earned from activities not directly related to the University’s mission. Filing is required in any year the University generates $1,000 or more in UBTI.
    Other Federal Returns
    The University must file the following:
    • Form 720 – Reports the PCORI fee for the University’s self-insured health plan
    • Form 4720 – Reports excise tax on excess compensation paid to covered employees whose remuneration exceeds the IRC Section 4960 threshold

Unrelated Business Income (UBI)

The University of Utah is exempt from federal income tax due to dual tax-exempt status. The exempt status does not apply to income generated from activities that are unrelated to the University’s core mission.

Unrelated Business Income (UBI) refers to income earned by a tax-exempt organization from a trade or business that meets all three of the following criteria:

Trade or Business
Regularly Carried On
Not Substantially Related to University's Mission

Note: An activity is not considered related to the University’s exempt purpose simply because the income is used to support exempt functions.

Statutory Exceptions to UBI — Excluded Income Types
  • Activities in which substantially all work is performed by unpaid volunteers.
  • Services provided primarily for the convenience of students, faculty, or staff, such as campus dining or bookstores.
  • The sale of goods that were donated to the University.
  • Certain types of research conducted in the public interest or under government grants.
  • Rental of real property (land or buildings) provided there are no substantial services included.
  • Payments for the use of the University’s intangible assets, such as trademarks or patents.
  • Passive income from investments in stocks, bonds, or other financial instruments.
  • Profits from the sale of capital assets, such as real estate or securities.
Tax Treatment and Department Responsibility
  • Net income from unrelated business activities is subject to the corporate income tax rate.
  • The responsible department is required to cover any resulting tax liability.
  • Departments must submit detailed income and expense information for any UBI-generating activities to Tax Services no later than August 15 each year.
Examples of UBI
  • Advertising revenue
  • Facility rentals to non-University entities
  • Sale of goods or services to the general public
  • Operation of a parking lot or food service open to the public