Name of Department:

Why should you complete this?

As a unit within the University that sells goods or services externally, your department may generate Unrelated Business Income (UBI), or may be subject to Washington state sales tax.

This survey will help us to determine whether the income from your activities is considered UBI. It will also provide you with some basic information about Washington Sales Tax.

Unrelated Business Income

The University, as an exempt organization, is generally not taxed on income it receives that is substantially related to its exempt purpose. However, it is taxed on income if three criteria are satisfied (see definitions of criteria later in the survey):

1)  The income is from an activity considered a trade or business.

2)  The activity is regularly carried on.

3)  The activity is not substantially related to the school’s exempt educational, research or public service mission.

Is the activity “a trade or business”?

Trade or business generally refers to any activity carried on that will eventually generate a profit.

Briefly describe the activity.

Does the activity generate gross income from the sale of goods or services?

Yes No

Is the activity profitable?

Yes No

Is the activity “regularly carried on”?

A trade or business is considered regularly carried on if it is conducted with frequency and continuity. An activity that is conducted once or twice in the year will generally not be considered “regularly carried on”.

Is the activity conducted on a regular basis?

Yes No

How frequently is the business carried on? (eg. weekly, seasonally)

Is the activity “substantially related” to the University’s exempt purpose?

If an activity does not play an important part in contributing to the University’s educational, research, or public service mission, it may be considered as not substantially related.

Some examples of activities that have been considered not to be substantially related are:

-  Operation of a golf driving range for the general public

-  Operation of a parking lot serving non-UW customers

-  Advertising – generally any message designed to get the viewer to buy the advertiser’s product. Language may include qualitative or comparative price information. (Income from advertising would generally be UBI, while sponsorship payments generally qualify as non-taxable income. Sponsorship involves a use or acknowledgement of the sponsor’s name or logo, but doesn’t include price information or any other inducement to buy. )

Does the business have a substantial relationship to the University’s exempt purpose?

Yes No

If yes, please briefly describe how the activity furthers the University’s purpose.

Reminder about Washington State Sales Tax

The University is required to collect and submit sales tax on sales of tangible personal property and certain services to outside entities. Sales between internal University departments are not subject to the sales tax.

Sales tax shall be calculated on the total sales price (including administrative overhead) at the current rate which includes both the state and local components of the tax. Examples of services subject to the retail sales tax include cleaning, repairing, altering, or improving real or personal property. Sales of goods shipped directly to entities outside the state of Washington are not subject to Washington sales tax.

Starting from July 1, 2008, Washington implemented a destination based sales tax whereby the local sales tax rate to be applied is the rate at the location to which the item is shipped. There is no change for deliveries outside the state or over-the-counter sales where customers take home goods from the sales location.

If items are purchased for resale, the department buying the items will not have to pay sales tax if a resale certificate is given to the seller, but the department will still need to charge sales tax unless it is selling to another University department.

For additional information on seller’s permits please see: http://www.washington.edu/admin/purchstores/tax.php

For additional information on the destination based sales tax please see:

http://www.washington.edu/admin/sp/office/salestax.htm

Name of person completing questionnaire:

Date: