SALES & USE TAX
The University of Texas at Austin is exempt from paying Texas state sales tax but must still assess tax on most sales involving tangible personal property. The Texas Comptroller of Public Accounts defines tangible personal property as something that can be seen, weighed, measured, felt, or touched, or that is perceptible to the senses in any other manner, including software.
Some services are also taxable, including: amusement services, cable television, data processing, information services, internet access, motor vehicle parking, nonresidential real property repair, restoration, or remodeling, personal property maintenance, remodeling, or repair, personal services, personal property services, security services, taxable labor (manufacturing, assembling, fabricating, or processing products), telecommunications, utility transmission and distribution.
Resources
- Sales Tax Overview and Procedure – Handout
- Texas Sales and Tax Exemption Certification Instructions – Handout
- Texas Comptroller Sales & Use Tax Information
- Sales Tax Rate Locator
- Recording Sales Tax Deposits in *DEFINE
- Payment and Distribution of Texas Sales Tax
- Payment and Distribution of Sales Tax for Other States
- Tax on Internet Sales
TAX EXEMPTION INFORMATION
UNRELATED BUSINESS INCOME TAX (UBIT)
The IRS imposes a tax called the unrelated business income tax on exempt organizations, such as universities, which recognizes revenues from activities that are not related to the mission of these organizations. The unrelated activity may be taxed even when the profits are used to fund activities related to the mission of the organization, such as a university’s education and research activities. In order to determine whether income may be taxable, a three-part test must be applied to the activity itself, regardless of the intended purpose for any profit realized from the activity.
To determine if the activity might be considered unrelated business income, answer the following questions:
- Is the activity substantially unrelated to the university’s exempt purpose of education and research?
- Is the activity a trade or business as evidenced by intent to profit?
- Is the activity regularly carried on as evidenced by frequency and continuity of the activity?
If you answered “yes” to all of these questions, please review the discussion of University of Texas System’s policies and procedures for reporting unrelated business income and determining whether the activity is taxable.
DDCE Business Contacts: please contact Teeyia Mercer, teeyia.mercer@austin.utexas.edu, DDCE Chief Business Officer with any questions about Sales Tax and UBIT.
