UBIT audit

A UBIT (Unrelated Business Income Tax) audit is an examination by the IRS of a nonprofit organization's income from activities unrelated to its main charitable purpose. If the organization earns income through business activities that are not substantially related to its mission, it must pay taxes on that income. The audit reviews whether the organization correctly reported such income and complied with UBIT regulations. If discrepancies are found, the organization might owe additional taxes, interest, or penalties. UBIT audits ensure nonprofit organizations adhere to tax laws when involved in commercial activities outside their primary charitable work.