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SPECIAL EVENTS AND CORPORATE SPONSORSHIPSIRS sought comment on other issues. 30 As the IRS was endeavoring to finalize itsguidelines in this area, Congress attempted to legislate in this area, only to havethe measure vetoed (for other reasons). 31 In early 1993, the IRS issued proposedregulations concerning the tax treatment, as gifts or items of unrelated income,of sponsorship payments received by tax-exempt organizations. 32(b) Qualified Sponsorship PaymentsThese developments led to the enactment of legislation that added to the federaltax statutory law the concept of the qualified sponsorship payment. These paymentsreceived by tax-exempt organizations and state colleges and universitiesare, pursuant to this safe-harbor provision, exempt from the unrelated businessincome tax. That is, the activity of soliciting and receiving these payments is notan unrelated business. 33From the standpoint of charitable giving, these rules differentiate between aqualified sponsorship payment, which is a deductible charitable contributionand as to which there is merely an acknowledgment, and a payment for servicesthat are, or are in the nature of, advertising.A qualified sponsorship payment is a payment made by a person engaged in atrade or business, with respect to which there is no arrangement or expectation thatthe person will receive any substantial return benefit other than the use or acknowledgmentof the name or logo (or product lines) of the person’s trade or business inconnection with the organization’s activities. 34 It is irrelevant whether the sponsoredactivity is related or unrelated to the organization’s exempt purpose. 35This use or acknowledgment does not include advertising of the person’sproducts or services, including messages containing qualitative or comparativelanguage, price information or other indications of savings or value, an endorsement,or an inducement to purchase, sell, or use the products or services. 36 Forexample, if in return for receiving a sponsorship payment, an exempt organizationpromises to use the sponsor’s name or logo in acknowledging the sponsor’ssupport for an educational or fundraising event conducted by the organization,the payment is not taxable. However, if an organization provides advertising ofa sponsor’s products, the payment made to the organization by the sponsor inorder to receive the advertising is subject to unrelated business income tax(assuming that the other requirements for taxation are satisfied). 37A qualified sponsorship payment does not include any payment arrangementwhereby the amount of the payment is contingent on the level of attendanceat one or more events, broadcast ratings, or other factors indicating thedegree of public exposure to one or more events. 38 The fact that a sponsorship30 These hearings and the questions posed by the IRS are summarized in § 23.3(e) of the first edition of this book.31 This legislation is summarized in § 23.3(f) of the first edition of this book.32 EE-74-92. These proposed regulations are summarized in § 23(g) of the first edition of this book.33 IRC § 513(i)(1); Reg. § 1.513-514.34 IRC § 513(i)(2)(A).35 H. Rep. No. 105-220, 105th Cong., 1st Sess. 69 (1997).36 IRC § 513(i)(2)(A).37 H. Rep. No. 105-220, 105th Cong., 1st Sess. 68 (1997).38 IRC § 513(i)(2)(B)(i). 624