The University of North Carolina Wilmington is tax exempt under the Internal Revenue Code Section 115 as an instrumentality of the State of North Carolina.
Therefore, for federal income tax-exempt purposes UNCW may engage in activities which include charitable, scientific, testing for public safety, literary, educational, national or international amateur sports competition, or for the prevention of cruelty to children or animals.
UNCW is not, however, exempt from tax imposed by Code Section 511, 512 and 513 on activities which are unrelated to those exempt purposes. Each fiscal year UNCW is required to file an Exempt Organization Business Income Tax Return (Form 990-T) with the Internal Revenue Service. We are required to report any unrelated business income generated by the activities of our academic and support units.
There are three elements that must be present for an activity to be considered unrelated to the University's tax-exempt purposes:
Unrelated business income is the income from a trade or business that is regularly carried on by an exempt organization and that is not substantially related to the performance by the organization of its exempt purposes or function, except that the organization uses the profits derived from this activity.
All departments are asked to notify the Tax Office of any new programs that may generate revenues that fit the definition of unrelated business income.