Is Your UBI Process Ready for an Audit?

| 3/8/2017

The IRS has increased its focus on unrelated business income (UBI) and, with changes to the information document request (IDR) process being implemented later this year, there may be more audits on the horizon.

Does the following sound familiar? “We track the same unrelated business income activities and have been using the same process for years.” If that describes your current approach to UBI, then you may be in for a surprise. Over the past few years, the IRS has increased its focus and enforcement activities in the area of UBI, especially with institutions that have net operating loss carryforwards that span several years. Audits of this nature are intrusive and can last for months, tying up staff and delaying organizational priorities. They can result in back taxes being levied or, worse yet, the elimination of planned carryforward losses in the future.

With organizational plans in this area spanning many years, there is also a risk that the team members who originated the process and defined what is or is not UBI for the organization have long since moved on to other positions or left the organization. A lack of institutional knowledge transfer could result in increased tax liabilities or, if the plans have not been reviewed recently, missed opportunities to claim legitimate deductions and expenses.

As a result of viewing this on-demand webinar, you should be able to:

  • Define what internal process you are currently using to file your IRS Form 990-T and whether it might be outdated
  • Examine and identify risks associated with relying on any carryforward losses
  • Identify what documentation should be created and kept to support UBI or non-UBI positions
  • As the IRS works to streamline its processes, more tax-exempt organizations may see IRS representatives showing up at their doors in the coming year. Leading organizations are preparing now, and you will not want to miss this session on what steps they are taking.

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