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Last Updated: 1/25/2018

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Unrelated Business Income Tax (UBIT)

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Unrelated Business Income Tax (UBIT) > File and Pay

  • What is UBIT?Back to top

    Unrelated Business Income Tax is imposed on a nonprofit, tax-exempt organization's income that is not generated from activities related to its normal business. The taxable amount of unrelated income is taxed at 9.8 percent.​

  • Who is a UBIT taxpayer?Back to top

    Any organization that falls under the following Internal Revenue Code sections:

    • Sections 511 to 515 (unrelated business income, tax-exempt entities)
    • Section 521 (farmer's cooperatives, tax-exempt)
    • Section 527 (political organizations)
    • Section 528 (homeowner's associations)​

  • What is considered unrelated business activity?Back to top

    The following three conditions must be met for an activity to be considered unrelated business:

    • It must be considered a trade or business undertaken with the public for profit;
    • It must be regularly carried on; and
    • It must not be substantially related to the organization's exempt purpose.​

  • Am I required to make estimated payments?Back to top

    Your organization is required to make estimated payments if the total tax is more than $500. The exception is if your organization is in its first year of business.​

  • Who is required to file a Form M4NP, Unrelated Business Income Tax Return?Back to top

    Any tax-exempt organization doing business in Minnesota that is required to file federal tax return Forms 990-T, 1120-C, 1120-H, or 1120-POL is also required to file a Minnesota Form M4NP and pay tax on federal taxable income assignable to Minnesota.

    Note: If you file Form 1120 with the IRS, you must file Form M4 with the Corporate Franchise Tax Division. If you do not file the appropriate return and pay the tax due, you may be assessed penalties and interest.​

  • When is my return due?Back to top

    The due date for filing Form M4NP and paying tax owed is the same as for your federal return.

    • 1120-H filers or 1120-POL filers: File by the 15th day of the fourth month after the end of the tax year
    • 990-T filers: File by the 15th day of the fifth month after the end of the tax year
    • 1120-C filers: File by the 15th day of the ninth month after the end of the tax year

    Short-year returns are due by the 15th day of the third month following the month in which the short year ends.​