Unrelated Business Income Tax Tax-exempt organizations may be subject to Unrelated Business Income Tax (UBIT) on income made from regularly conducted trade or business activities not substantially related to the organizations’ tax exemption. Organizations with $1,000 or more of unrelated business income must file two forms:
• Federal Form 990-T, Exempt Organization Business Income Tax Return • Minnesota Form M4NP, Unrelated Business Income Tax (UBIT) Return
COOPERATIVES A cooperative is a form of business organization in which the business is owned and controlled by those who use its services. A cooperative may be organized as a legal entity or it may be an unincorporated association. Cooperative associations are organized as legal entities under and governed by Minn. Stat. Chapter 308A. Non-Minnesota cooperatives that wish to do business in Minnesota register under Minn. Stat. Chapter 303. Cooperatives are organized primarily for the purpose of providing service to their user-owners, rather than to generate profit for investors. Although cooperatives had their origins in Minnesota in the agricultural sector, in recent years many consumer cooperatives have been established. Some of the more common purposes for which cooperatives are formed are: • To supply members with agricultural production components such as fuels, fertilizers, feed and chemicals; • To provide members with an organizational structure for jointly handling and marketing their products; • To provide services to members, like housing, electricity, telephone, insurance, and health care. Cooperatives have several features that distinguish them from for-profit business corporations. These include control of the cooperative by user-owners, services provided at cost, and limited return on equity capital. Cooperatives are required to file an annual renewal once each calendar year. Failure to file this registration will result in dissolution. The cooperative will have one year to reinstate by filing the registration and paying the fee. User-owner Control Cooperatives are owned and controlled by their members. By statute in Minnesota, members each have one vote, rather than multiple votes based on their capital investment in the cooperative. In some other states, proportional voting based on a member’s volume of business with the cooperative is allowed. Operations generally are conducted by a board of directors elected by members, and by management hired and supervised by the board.
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