University Business Activity
Date of Current Revision: March, 2012
Responsible Officer: Assistant Vice President for Finance
This policy outlines the criteria for the university to ensure that its business activities are conducted in conformity with federal income tax legislation.
Legally mandated conformity to federal income tax legislation requires the Assistant Vice President for Finance to enforce this policy.
University Business Activity:
A commercial enterprise – profit or nonprofit -- involving the sale of goods or services.
Unrelated Business Activity:
A trade or business regularly carried on by an exempt organization that is not substantially related to its exempt mission.
Business Activity Synopsis:
A written description of the university business activity that includes the following:
This policy applies to all JMU departments engaged in business activities that result in generating revenue for the university.
James Madison University is exempt from federal income and state sales and income taxes for all activities conducted in relation to the university's mission. However, activities that cannot be associated with the university’s mission are subject to federal income tax.
In the process of disseminating knowledge, it is often desirable for the university to charge fees for providing goods and services that will enhance, promote or support its instructional, research and public service, as well as all other educational and support functions that will meet the needs of JMU students and faculty and staff members, and members of the general public who participate in university events. Therefore, it is the policy of the university to engage primarily in those business activities that meet all of the following criteria:
University departments and activities shall prepare and submit a Business Activity Synopsis to the assistant vice president for finance for each university business activity upon each of the following occurrences:
University departments and activities shall provide the following information for each business activity that the assistant vice president for finance has determined is an unrelated business activity:
The Assistant Vice President for Finance shall review and evaluate the Business Activity Synopsis for all university business activities in accordance with this policy, recommend to the vice president for administration and finance whether the enterprise should be authorized or continued as a university business activity and determine if the business activity is an unrelated business activity and is required to be included in the Exempt Organization Business Income Tax Return 990-T. The Assistant Vice President for Finance shall also prepare the Exempt Organization Business Income Tax Return 990-T. The Senior Vice President for Administration and Finance shall review recommendations
from the Assistant Vice President for Finance. The decision whether or not to authorize new activities or continue existing activities shall be communicated to the originating department or activity.
Employees who violate this policy are subject to discipline commensurate with the severity and/or frequency of the offense and may include termination of employment.
The business activity will be terminated by the Senior Vice President for Administration and Finance if the department does not comply with the requirements of this policy.
Authority to interpret this policy rests with the president and is generally delegated to the assistant vice president for finance.
Previous Version: March, 2010
Approved by the President: April, 2002