Religious organizations are generally exempt from federal income tax. However, like some other tax-exempt charities, these organizations can be subject to unrelated business income tax (UBIT). They usually can conduct income-producing activities that are related to their tax-exempt purpose (such as selling religious books) as long as the activities aren’t “substantial.” But income may be subject to UBIT if: 1) the income-producing activity constitutes a trade or business, 2) the trade or business is regularly carried out, and 3) it isn’t substantially related to the organization’s exempt purpose. For more information on your religious organization’s tax obligations, contact us.
