The University engages in sales and service activities in support of its mission of instruction, research and public service. Effective financial management of sales and service activities requires adherence to all University Financial Policies. These include but are not limited to Inventories, Extension of Credit to Outside Third Parties for Sales and Services, Collection, Reporting and Payment for all States Sales and Use Tax, Sales and Service Activities, and Internal Control Policies.
April 2021Responsible Office
Sales and service activities are generally limited to those activities that are substantially related to the University’s exempt purposes of instruction, research and public service. Even though the University primarily engages in sales & services related to its mission, there can be other sales or services activity that are not mission related.
These non-mission related activities can be classified in three general categories; sale of” tangible personal property”, sale of “digital property”, and “Fee for Services” activities.
Tangible Personal Property- is property that can be seen, weighed, measured, felt and touched. Examples of sold tangible property would be the sale of computers, software, equipment, supplies, books, etc.
Digital Property – is property delivered through electronic means. Examples are books, music, photographs, videos, etc.
Fee for Service – Activities that include both Facilities or Equipment Use Arrangements, and Services Arrangements. Requests by a third person to rent or otherwise use University equipment or research facilities, on a limited basis, for a purpose unrelated to research being conducted at the University, and without any assistance or intellectual input from University personnel, are proposed Facilities or Equipment Use Arrangements. Requests by a third person to have a University faculty member, staff member or student perform non-research-related and technical services, using University facilities or equipment, on a limited basis, for the sole or principal benefit of the third person, are one type of proposed Services Arrangements.
Fee for service arrangements may exist for scientific, or research-oriented, activities, or for professional consulting in the fields of business, education and community service.Scientific/research-oriented agreements will typically be considered fee-for-service when the following conditions exists:
All proposed new sales and service activities must be reviewed by the Office of the Comptroller for possible unrelated business taxable income (UBTI) considerations and, for Facilities or Equipment Use arrangements, possible sales and use tax.
Accounting for sales and service activity will be in accordance with the AICPA Audit Guide for Colleges and Universities.
Sale and service activity that is transacted on credit cards is subject policy 2006 – Credit Card Sales PCI Compliance.
All Fee for Service activity should be documented with a contract or other documentation acceptable to the Office of Research Services or and Office of the General Counsel
Proper financial management of sales and service activities is the responsibility of the school/department’s dean or director
The responsible dean or director must ensure that the approved purpose for which the sales or service activity was organized is maintained. Any significant deviation from the original purpose must be approved by the Senior Planning Group.
Separate accounting records must be maintained for each unique sales and services activity.
Deans and directors of responsibility centers are required to report annually to the Office of the Comptroller the nature of any sales and services activity so that a proper determination of UBTI exposure can be performed.