Section Library
Non-Dues Revenues
Taxation of Non-Dues Revenues
All sources of non-dues revenues have to be reported and explained on Form 990. Certain areas of non-dues revenues are subject to Unrelated Business Income Tax. A short summary of non-dues revenues and their treatment for tax purposes follows:
Books, Publication Sales
The publishing and selling of books and other publications will constitute an unrelated trade or business activity unless the sale is related to the exempt purposes of the organization. Sales of publications by AWWA national do relate to our exempt purpose and are therefore not subject to Unrelated Business Income Tax.
Sale of Advertising
Advertising is almost always unrelated business income unless it is not regularly carried on or lacking in profit motive.
Trade Shows, Conventions
Qualified convention and trade show activities are not unrelated business income. A qualified trade show is an activity, one of the purposes of which is to attract industry members without regard to membership in the sponsoring organization, and the general public to the show for any of the following purposes:
- To display industry products
- To stimulate interest in and demand for industry products or services
- To educate people in the industry in the development of new products or services
- To educate people in the industry about new rules and regulations affecting the industry
Employment Referral, Hiring Network
Income from these activities is usually taxable because it principally benefits individual members rather than the entire industry.
Certification Programs
For 501(c)3 organizations, certification programs which amount to more than 5% of the organization's activities could jeopardize tax exempt status.
Certification, Testing Activities
Since these activities provide standards for all of an industry and not as a service to individuals, certification and testing are not taxable activities.
Rental Income
Income from rents is not taxable unless it is debt financed and/or more than 15% of the use of the property is used in an unrelated function.
Taxable Subsidiaries
Interest, rents, and royalties from a controlled subsidiary are unrelated business income.
Dividend Income
Dividend income received from a taxable subsidiary is not subject to unrelated business income tax.
Investment Income
Investment income is not subject to taxation.