A recent post suggested that museum shops cannot sell merchandise that is unrelated to their institutions' collections. In fact, museum shops in the U.S. may sell unrelated merchandise, but such sales are subject to the Unrelated Business Income Tax (UBIT). If it conducts an audit, the Internal Revenue Service will determine the "relatedness" of each item and assess tax accordingly. There are exceptions to the rule, including (for example) certain items that are sold for the visitors' convenience. In a recent case, IRS ruled that Colonial Williamsburg could sell raincoats without being taxed, because visitors might not otherwise be able to view the collections. But they weren't allowed the same privilege for toothpaste and pain-relievers. The issue of whether any given item is also carried by for-profit shops is irrelevant, at least to the IRS. Andy Finch AAM Government Affairs [log in to unmask] >