Quietly, almost without notice, the Internal Revenue Service in late April wrote finis to the corporate sponsorship issue that has bedeviled collegiate sports for more than a decade.

Institutions, conferences and football bowl games will now be able to move forward with at least some degree of certainty in creating sponsorship agreements. The fear that an unintentional mis-step could lead to huge tax consequences has been lifted. But only, of course, if college decision-makers familiarize themselves with the new regulations.

Starting with an IRS challenge to the Mobil Cotton Bowl in the early 1990s, the IRS added to the burdens of the collegiate community by seeking to tax payments from sponsors who had been willing to support athletics without any overt advertising. The IRS tried to tax the revenue as "unrelated business income," separate and apart from the ordinary income of sporting events. The tortuous path took the form of, first, proposed regulations in 1993, then Congressional legislation turning Internal Revenue around in 1997, followed by proposed new regulations in 2000 before the final rules were issued three months ago.

Generally, exempt organizations, which include college athletics programs, must pay taxes on income received from an unrelated trade or business, something not related to its exempt purpose; it's an "unrelated business income tax" (or UBIT). For example, a university that runs a macaroni factory might find the government raising questions about whether the macaroni business is related to education. Other macaroni businesses, without the educational connection, could claim that they couldn't compete with tax-exempt macaroni factories.

In the early 1990s, the IRS began conducting a regional audit of sponsorship and television revenues taken in by the Mobil Cotton Bowl in Dallas (and the John Hancock Bowl in El Paso, Texas). A regional office held that Mobil's name and logo in the title of the Cotton Bowl and appearing on the players' uniforms, along with usage of signs and scoreboards, constituted a "substantial return benefit" for the contribution. All of those sponsorship dollars were going to be subject to UBIT. After a huge outcry from the exempt-organization community, however, the IRS reconsidered its position and issued its first set of proposed new regulations in 1993.

Those proposed regulations distinguished "advertising," which was unrelated to putting on a football or basketball game from "acknowledgments," the mere recognition of a sponsor's payment. The former was unrelated and taxable; the latter was related and untaxable.

Importantly, however, under those 1993 proposed regulations, the IRS also said that if any advertising activities were associated with the otherwise nontaxable acknowledgements, then all payments were "tainted" and all were taxable. In a sense, the proposed regulations told football bowl games to get a title sponsor, but make sure the title sponsor didn't do any television advertising during the game, hardly an attractive proposition.

In the Taxpayer Relief Act of 1997, Congress came to the aid of the collegiate athletics community. First, it said that "qualified sponsorship payments" -- made where there is no arrangement to receive any benefit other than the use of the name or logo in connection with the exempt organization's activities -- were not subject to UBIT. Just as importantly, Congress amended Section 513 of the Internal Revenue Code to remove the "tainting" rule.

Congress said that the use of promotional logos or slogans that are an established part of the sponsor's identity does not, by itself, constitute advertising. Indeed, Section 513 specifically says that, to the extent a portion of sponsor dollars would (if made as a separate payment) be a qualified sponsorship payment, that portion of the payment and the other portion of the payment must be treated separately. Congress also addressed other issues, such as special rules dealing with complimentary tickets, receptions for major donors, and the use of the exempt organization's trademark or logo. It took the IRS three years to issue its proposed regulations for the 1997 law and still another two years to finalize them.

Now each contract will be broken down into its component parts, looking at the benefits that are received as part of sponsorship agreements. Any athletics director would be well-advised to read the Final Regulations -- and seriously think about them. Helpfully, the IRS provides a number of examples in the new rules, including a lengthy one that deals with bowl games but has specific application to regular-season activity.

Some rules of thumb from the new regulations:

The "payer" -- the entity making the payment to the institution -- still cannot receive a "substantial return benefit" for its contribution. Watch out for requirements to make promotional appearances, participate in joint promotions or develop joint marketing plans.

Logos on uniforms appear to be acceptable, as well as names or logos on in-stadium signage.

Tickets or other goods and services become a problem when they exceed 2 percent of the sponsorship payments. Below that, there's a safe harbor; above that, the IRS might find that the payment is not an exempt "qualified sponsorship payment." The IRS had proposed a top value of $74 to the "safe harbor," but eased up in the final regs.

Exclusive sponsorships are acceptable, but, according to the IRS, the institution cannot commit itself to exclusivity in sales of a product line. (This guidance seems to leave open the question of exclusive stadium pouring rights, as opposed to sales rights in a bookstore, for example.)

Sponsorship payments can be contingent on games being broadcast, but cannot be contingent on ratings or attendance.

And, in a concession to the 21st century, hyperlinking is addressed. It's acceptable, but not to a site where the institution gives an endorsement to the sponsor.

More than a dozen years has gone into the issue. Hopefully, finally, it's over.

Philip R. Hochberg, a Washington, D.C., lawyer, is counsel to the Division I-A Athletic Directors Association.