All organizations subject to the tax on unrelated business income,
except the exempt trusts described in section 511(b)(2), are taxable
at corporate rates on that income. All exempt trusts subject to the
tax on unrelated business income that, if not exempt, would be taxable
as trusts, are taxable at trust rates on that income. However, an
exempt trust may not claim the deduction for a personal exemption that
is normally allowed to a trust.
The tax is imposed on the organization's unrelated business taxable
income (described in chapter 4). The tax is reduced by any applicable
tax credits, including the general business credits (such as the
investment credit and the alcohol fuel credit) and the foreign tax
credit.
Alternative minimum tax.
Organizations liable for tax on unrelated business income may be
liable for alternative minimum tax on certain adjustments and tax
preference items.
Returns and Filing Requirements
An exempt organization subject to the tax on unrelated business
income must file Form 990–T and attach any required
supporting schedules and forms. The obligation to file Form
990–T is in addition to the obligation to file any other
required returns.
Form 990–T is required if the organization's gross income
from unrelated businesses is $1,000 or more. An exempt organization
must report income from all its unrelated businesses on a single Form
990–T. Each organization must file a separate Form 990–T,
except section 501(c)(2) title holding corporations and organizations
receiving their earnings that file a consolidated return under section
1501.
The various provisions of tax law relating to accounting periods,
accounting methods, at-risk limits (described in section 465),
assessments, and collection penalties that apply to tax returns
generally also apply to Form 990–T.
Where to file.
Form 990–T must be filed with the Internal Revenue Service,
Ogden, UT 84201–0027.
When to file.
The Form 990–T of an employees' trust described in section
401(a), an IRA (including a traditional, SEP, SIMPLE, Roth, or
education IRA), or an MSA must be filed by the 15th day of the 4th
month after the end of its tax year. The Form 990–T of any other
exempt organization must be filed by the 15th day of the 5th month
after the end of its tax year. If the due date falls on a Saturday,
Sunday, or legal holiday, the return is due by the next business day.
Extension of time to file.
A corporation may request an automatic 6–month extension of
time to file a return by submitting Form 7004, Application for
Automatic Extension of Time To File Corporation Income Tax
Return.
A trust may request an extension of time to file a return by
submitting Form 2758, Application for Extension of Time To File
Certain Excise, Income, Information, and Other Returns. Trusts
are not granted automatic extensions of time to file.
Public inspection of return.
Unlike information returns filed by exempt organizations, Form
990–T is not available for public inspection.
Estimated tax.
A tax-exempt organization must make estimated tax payments if it
expects its tax (unrelated business income tax after certain
adjustments) to be $500 or more. Estimated tax payments are generally
due by the 15th day of the 4th, 6th, 9th, and 12th months of the tax
year. If any due date falls on a Saturday, Sunday, or legal holiday,
the payment is due on the next business day.
Any organization that fails to pay the proper estimated tax when
due may be charged an underpayment penalty for the period of
underpayment. Generally, to avoid the estimated tax penalty, the
organization must make estimated tax payments that total 100% of the
organization's current tax year liability. However, an organization
can base its required estimated tax payments on 100% of the tax shown
on its return for the preceding year (unless no tax is shown) if its
taxable income for each of the 3 preceding tax years was less than $1
million. If an organization's taxable income for any of those years
was $1 million or more, it can base only its first required
installment payment on its last year's tax.
All tax-exempt organizations should use Form 990–W
(Worksheet), Estimated Tax on Unrelated Business Taxable Income
for Tax-Exempt Organizations, to figure their estimated tax.
An exempt organization must deposit its unrelated business income
tax (including estimated tax) using one of the following methods.
Electronic deposits.
Some organizations are required to electronically deposit all
depository taxes under section 6302, including the unrelated business
income tax, using the Electronic Federal Tax Payment System (EFTPS).
If the organization is required to deposit electronically and does not
do so, it may be subject to a 10% penalty. Organizations that are not
required to make electronic deposits may voluntarily participate in
EFTPS. To enroll in EFTPS, call 1–800–555–4477 or
1–800–945–8400. For general information about EFTPS,
see section 11 of Publication 15, Circular E, Employer's Tax
Guide, or call 1–800–829–1040.
Deposits with Form 8109.
If the organization is not required to (or does not voluntarily)
make electronic deposits, it must make its deposits with Form 8109,
Federal Tax Deposit Coupon.
The completed Form 8109 with the payment must be mailed or
delivered to an authorized depositary (financial institution) for
federal taxes, as instructed on the coupon.
Deposits should not be sent directly to the IRS. A penalty may be
imposed if the deposits are sent to an IRS office rather than to an
authorized depositary.
