DynamicBenchmarking-FINAL

 

Member Benefits, Benchmarking for Associations, non-dues revenue

Does your Association's Non-Dues Revenue Pass the Tax Test?

Sep 22, 2021 9:59:23 AM

nonduesrevenuegenerator

The Dynamic Benchmarking team is excited to be participating in the Non Due$-A-Palooza event happening this week and we look forward to sharing what we learn at this exciting event.  We hear from associations all the time that non-dues revenue is becoming increasingly important and at Dynamic Benchmarking, we have developed several programs that can help your association utilize benchmarking as a non-dues revenue generator and member benefit.

One of the items we get asked frequently is, exactly what constitutes a taxable item when non-profits like associations start increasing their non-dues revenue. Our friend at Tenenbaum Law Group, Jeff Tenenbaum recently wrote a blog article on this subject and since it's full of great advice, we thought we'd share it here with our followers.


UBIT: A Comprehensive Overview for Nonprofits by Jeffrey S. Tenenbaum, Esq.

While most income of nonprofit, tax-exempt organizations is exempt from federal and state corporate income tax, certain income of nonprofits is subject to tax – a tax known as the unrelated business income tax (UBIT). The rules governing UBIT are complex and confusing. This article provides an overview of the basic UBIT rules and also examines three key exceptions to UBIT to enable nonprofits to strategically plan to maximize their revenues and minimize their income taxes.

Background

Although nonprofit, tax-exempt organizations (hereinafter referred to as nonprofits) are granted a general exemption from federal corporate income tax by the Internal Revenue Code (the Code) – for income from activities that are substantially related to the purposes for which the nonprofit’s tax-exempt status was recognized by the IRS – they nevertheless are potentially taxable for income derived from unrelated business activities. click here to read the full article