Selling goods over the Internet, as well as offline, can make a not-for-profit organization subject to the Unrelated Business Income Tax (UBIT) unless the sales are connected to your tax-exempt objective.

UBIT, based on corporate income tax rates, is applied to income generated from a not-for-profit organization's activities that are not "substantially related" to the group's tax-exempt purpose.

The status of sales is made on an item-by-item basis, so you need a comprehensive system in place for e-commerce endeavors. Another area where your organizations needs to exercise caution is in receiving revenue from licensing the use of your name and logo on another Web site.

 

To protect your tax-exempt status, contact us to make an appointment. Our professionals can help your not-for-profit organization set up its sales operation in the most tax-efficient manner.

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