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Sponsorships could boost taxes – Nonprofits face proposed IRS rule

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Proposed rules by the Internal Revenue Service could force colleges and nonprofits to pay taxes on income from corporate sponsorships, The Wall Street Journal Reports.

Marcus S. Owens, a former IRS official who helped write the new rules while at the IRS, told the Journal that exclusive marketing deals could require many schools and nonprofits to pay some unrelated business income taxes.

Colleges in the past typically did not treat such income as taxable, said Owens, who nowis at the law firm Caplin & Drysdale in Washington, D.C.

Another IRS official, James J. McGovern, told the Journal the proposed rules “have the potential to significantly increase” taxes for many nonprofits signing exclusive deals, such as those involving athletic gear and soft-drink contracts.

The IRS plans a June 21 hearing on the proposed rule.

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