Unrelated Business Income Tax
Kansas State University is exempt from federal and state income tax as an integral part of the State of Kansas. However, revenue generating activities not directly related to Kansas State University’s exempt purposes of research, instruction and public service may be subject to federal unrelated business income tax (UBIT). Congress imposed UBIT on exempt organizations to eliminate a source of unfair competition, by placing tax exempt organizations on the same basis as nonexempt organizations with which they compete. When a revenue generating activity is a trade or business, regularly carried on, and is not related to the University’s mission, it may result in UBIT.