A short cheer for the IRS

December 17, 1991|By New York Times

WHILE the IRS may not be the government's most popular agency, disgruntled football fans will cheer its decision to tax the irritating attachment of corporate names to college bowl games.

Case in point: the Mobil Cotton Bowl. It was the just-plain Cotton Bowl for years until Mobil Corp. came up with big "sponsorship" bucks -- as much as $2 million a year -- and got its name attached to the event and its attendant publicity.

The bowls will end up paying the tax, although they claim that sponsors' contributions are the charity of enlightened corporations, tax-exempt because bowl profits support collegiate athletics.

But the IRS sees it more realistically, as the sale of advertising, unrelated to the educational purpose on which the bowls' tax-exemption is based.

Thus the contributions are taxable to the bowls at the 34 percent rate for corporate income.

The IRS finding is subject to appeal, and has yet to be applied generally. If the agency prevails in the end, bowl organizers claim they'll be devastated.

That's doubtful; they'll just call more commercial time-outs.

As for the sponsors, they won't be hit directly; their contributions are deductible business expenses, whether purely charitable or purely commercial.

Advertising is perfectly proper in its place. But advertising disguised as corporate benevolence and repeatedly pounded into the consciousness of a captive audience should be seen -- and taxed -- for what it is.

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