Certain expenditures or payments for events create taxable incidents for which the Foundation must comply. Also, certain revenues generated by events or contracts create tax liabilities. Any taxable event requires the Foundation to prepare tax reports and to pay the appropriate taxes. The types of tax reporting are identified herein.
Sales and Use Tax
Unlike the University of Georgia, the University of Georgia Foundation is not exempt from sales and use taxes. It is the responsibility of the person requesting the expenditure or reimbursement to include applicable sales tax and inform the vendor that the Foundation is not exempt from such taxes. Any expenditure paid directly to the vendor by the Foundation must include applicable sales taxes. Any individual who incurs a business expense to be reimbursed by the Foundation must be sure to pay applicable sales or use tax. Check requests submitted to the Foundation with invoices that do not include sales tax will be returned for correction for all in-state (Georgia) vendors. For out-of-state vendors or web purchases, the applicable county use tax rate will be added and expensed to the appropriate Foundation fund.
Sales tax is applied to any “sale”. Sale means any transfer of title or possession, transfer of title and possession, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means of any kind of tangible personal property for a consideration and includes fabrication, furnishing, repairing, or servicing tangible personal property and transfer of possession without transfer of title [per State of Georgia Department of Revenue O.C.G.A. 48-8-2(8)].
Use tax is applied to any “use” meaning the exercise of any right or power over tangible personal property incident to the ownership of the property. Use tax includes the use, consumption, distribution, and storage of tangible personal property
[per State of Georgia Department of Revenue O.C.G.A. 48-8-2(12) & (13)]
The expense of the sales and use taxes will be charged to the Foundation account receiving the income or incurring the expense.
Items sold at auction are essentially a purchase, and as such will trigger state sales tax. Per Georgia state law, the applicable sales tax for each item sold at auction will be charged back to the appropriate Foundation fund and remitted to the state. Please note that Foundation funds cannot be used to purchase items for auctions; such items must be donated or purchased by other means.
More information on applicable sales and use taxes on income or expenses can be found at the Georgia Department of Revenue homepage. Please contact the Expenditure Control Department within the Foundation Office for questions.
IRS 1099 Miscellaneous Income Form
The University of Georgia Foundation follows the Internal Revenue Service’s guidelines for issuance of 1099 Miscellaneous (MISC) Income Forms to individuals/corporations who receive payment for rents, contract services, honoraria, legal fees, consulting fees, prizes or awards, reimbursable expenses for which original receipts are not provided, and other income payments during the course of a calendar year. For definitive examples of reportable income and the minimums that apply each year, consult the IRS’s website at www.irs.gov . Social security numbers and taxpayer identification numbers are required on any check requests submitted for payment of these type expenditures. For this reason, an IRS W-9 form is required for all vendors, companies and individuals who are non-UGA employees.
Form 1099-MISC Income forms are completed and mailed to recipients by January 31 for the previous calendar year.
Unrelated Business Income Tax (UBIT)
As a 501(c) (3) organization, The University of Georgia Foundation is subject to unrelated business income tax (UBIT). As a general rule, the Foundation does not engage in activities which would be considered as unrelated business income because such activities are not considered part of our tax-exempt purpose by the Internal Revenue Service, and they can result in an additional cost of paying unrelated business income tax (UBIT). Even if an unrelated business activity yields no profit, it must be reported to the Internal Revenue Service. It is the Foundation’s policy that we must consult with legal counsel and our tax preparation professionals before any transaction which has elements of unrelated business income is considered. The Foundation will not accept any income deposits that could have been generated from an unrelated business activity that has not been approved by the Senior Director of Financial Reporting for the Foundation.
Please contact the Senior Director of Financial Reporting before considering any revenue generating activities involving the use of Foundation funds or the deposit to a Foundation fund. Any contracts involving these revenue-generating activities must be reviewed by the Foundation and be approved and executed by the Chief Financial Officer of the Foundation.
Last Updated on September 17, 2019