IRS: Qualified Sponsorship Payment or Advertising - Unrelated Business Tax Income

IRS: Qualified Sponsorship Payment or Advertising - Unrelated Business Tax Income

The IRS defines Advertising and Qualified Sponsorship Payments as two different things.  


The products and services you receive from Digital Deets to manage your sponsorships are designed to fall under the IRS classification of "Qualified Sponsorship Payment" which would mean these sponsorships are NOT considered Unrelated Business Tax Income and thus you would NOT have to report the funds received from your digital sponsorships program as income.  Whether you use our services and products or your own methods to procure sponsorships, you should understand the differences between Advertising and Qualified Sponsorship Payments as defined by the IRS.  

Here are the main factors to consider for your sponsorships to be "Qualified Sponsorship Payments:"

  • The business name or logo is acknowledged NOT endorsed
  • There are no messages containing qualitative or comparative language, price information, or other indications of savings or value
  • There is not an inducement to purchase, sell, or use such products or services
  • There is no arrangement or expectation that the person/business will receive any substantial return benefit in exchange for the payment.
Payment for the sponsorship does not provide a  substantial return benefit other than the use or acknowledgment of the name or logo (or product lines) of such person's trade or business in connection with the activities of the organization that receives such payment.  

It's important to note the difference between an advertisement and an acknowledgment.  Here's how the IRS defines an acknowledgment:

  • Exclusive sponsorship arrangements (as opposed to exclusive provider arrangements)
  • Logos or slogans that do not contain qualitative or comparative descriptions of products, services, facilities or company
  • A list of payor’s locations, telephone numbers or internet address
  • Value-neutral descriptions including displays or visual descriptions of product lines and/or services
  • Brand or trade names and product or service listings
Click here to review the IRS documentation on these matters.


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