IRS UPDATE: A TAXING ISSUE
(Monday. June 9. 11:00 a.m.-12:30 p.m.)
I would like to introduce our panel before they speak individually but you see in your program that it includes Phil Hochberg, Bill Byrne and Congressman Norman Dicks from our state of Washington. I will introduce them appropriately at the time, but I am not going to take any further time. I want you to hear this. We have met this morning and reviewed some information that we received within the last hour on this, so it's important that it's current, it's up-to-date and you will be involved. The first speaker we have is Phil Hochberg. Phil is an attorney. He represents NACDA in Washington, D.C. in working with Congress.
He not only is very active in public affairs and represents a number of professional and collegiate interests, he also has more than a passing interest in athletics. He is a public address announcer for the University of Maryland. He is the stadium announcer for the Redskins, he works p.a. for George Washington basketball
and he is one of the people who we depend on so much to keep us involved in current legislative things that are happening in Washington, D.C. Phil Hochberg.
We have more people here than we normally have at a George Washington University basketball game. I would like to take the opportunity, and Bill and Norman and I discussed how we were going to structure this panel, to discuss the status of tax legislation and regulation in Washington. There has been a great deal of confusion over the past few weeks because as the Tax Reform Bill seems to move toward passage, we had at the same time the issuance by the Internal Revenue Service on April 28 of Revenue Ruling 86-63, which dealt with charitable contributions. I would like to take the lawyer's role, if you will, and distinguish for you the two issues that we currently have in front of us. The two issues really are kind of merging
in the Tax Reform Bill, but there are two specific issues which I want to try and square away in your minds.
First is the Tax Reform Bill. For our purposes, this deals primarily with business purchases of
tickets to your athletic events. When a business buys tickets for business reasons, how much of that expense can the business write off? The House Tax Reform Bill calls for an 80 percent write-off. There will be as
a result of that, I suspect, some loss in sales. But as we have talked with a number of athletic directors, this is apparently something that the athletic directors feel they can probably live with. The Senate bill gives us,however, one step up and that is, while it allows an 80 percent write-off for tickets purchases, it also allows an 80 percent write-off for skybox leases. I realize that many of you do not have skyboxes, never will have skyboxes and probably are not the least bit intersted in skyboxes. Nonetheless, we have identified at least 33 major universities that already have skyboxes, have them under construction or in the case of the University of Oregon, have skyboxes planned. The Senate version of the Tax Reform Bill as opposed to the House version, allows for an 80 percent write-off not only in tickets, but in skybox leases as well.
You can see before me a number of handouts, and I'll leave these for you, but Senator Packwood on the floor of the Senate last Wednesday recognized the efforts that NACDA had made, and in a very real sense, saluted the efforts NACDA had made in the course of the Tax Reform Bill. Let me address this specific skybox issue. As I indicated to you, the House did not allow any write-offs for skybox leases. On the Senate
side, an 80 percent write-off is allowed exactly the same as the bill allows for ticket write-offs. If any of you are interested in one of the hand outs that we have up here is a comparison of the ticket deductibility language from the report accompanying the House bill and from the report accompanying the Senate bill. One of the problems that we have had all along in the course of this legislation is an absence of information from those of you who would be willing to make contact with members of the House or Senate. Here are forms which I ask you to take a moment during the course of this panel discussion to fill out the information. You might also include, if you will. your hotel room number here in case we need you. Norman Dicks is going to address some of the things that are literally happening this morning. We would like to get the information from you. not only any skybox efforts that you might be making. but also on preferred seating plans. That is a situation where somebody may contribute $200 for the opportunity to purchase season tickets to your football game, your basketball game, your hockey game, and so forth.
This really is the second issue, the preferred seating issue. That's the second tax issue that we have in front of us right now. This is a result of Revenue Ruling 86-63 which was issued by the
Internal Revenue Service on April 28. Many of you may recall when the IRS issued its revenue ruling in 1984 dealing with charitable deductions. I hasten to note for you the difference between the business purchase on the one hand, that's what the Senate tax bill is currently considering, and the charitable contribution on the other hand. By this time, many of you are familiar with Revenue Ruling 86-63. It sets up four different circumstances depending on whether you have a sold-out stadium or not; depending on whether comparable seats in nonsold-out stadiums are available or not. It has very complicated provisions in it
dealing with how the IRS will treat charitable contributions to your athletic programs. As a result of the issuance of this charitable contribution ruling on April 28, Senator Pryor of Arkansas introduced legislation, Senate Bill 2379, to repeal Revenue Ruling 86-63. He introduced that on April 28 and Norman Dicks, Congressman from Washington sitting to my right here, introduced last Thursday House Bill 4943 which would have the same affect as Senator Pryor's legislation.
We are working very closely with Senator Steve Symms of Idaho, and I ask that any of you who are here representing Idaho University, Idaho colleges, maybe you can make a point to stop up afterwards. We'll chat specifically about this. Mr. Symms is preparing legislation which we hope he will introduce as an amendment to the Senate consideration of the tax bill. It would take care of virtually all of our problems in the charitable contribution area. We don't know at the moment whether Senator Symms will in fact introduce the legislation, we are quite hopeful that he will at some time this week. We will be contacting a number of you asking that even from down here at Marco, make a call to your Senator asking to please support Senator Symms' amendment to the tax bill. It doesn't cost the Federal government anything. It's revenue neutral and the colleges need it.
So we have two different issues which we will end up focusing on today. One dealing with business deductions. How much can a business write off when it purchases your tickets? The second is the proposed amendments to the tax reform legislation dealing with charitable contributions. How much can somebody
write off when he contibutes, and in return for that contribution, gets the right to buy tickets? The real lobbying that you will hear is really not done in Washington. The effective lobbying is done back home. It's done by Bill Byrne contacting Senator Packwood. If in fact, that skybox provision stays in the Senate version and becomes law, you well might refer to it as the Byrne amendment because Bill was quite effective in his contact with Senator Packwood. Senator Packwood's statements on the floor of the Senate reflect the job that Bill Byrne has done, not only for the University of Oregon, but for collegiate athletics. The efforts of a number of other members of NACDA in dealing with their legislators can't be ignored; Mike Lude's efforts
with Representative Dicks, Gene Bleymeier's efforts with Senator Symms, Frank Broyles's efforts in recent days with Senator Pryor.
I wish to express my sincere appreciation to Harley Lewis, to Myron Roderick and Gary Cunningham. There are a number of others who have been very willing to cooperate and very effective in their cooperation. The battle isn't over by any means and, indeed, we may have to try organizing the troops while we are down here at Marco. We are going to spend some time talking about the contacts that can be made, that have been made and that should be made to your collective representatives. These are important issues for you. They are dollars-in-the-pocket issues. Thank you for the time today. Thank you all for your efforts in the past.
Ladies and gentlemen your next speaker is one of your own; athletic director at the University of Oregon, a close friend of mine and a colleague in the Pac-1O, Bill Byrne.
Thank you Mike. I would like to tell you I got involved in this project because I'm really an altruistic type of person. I like to go out and do good things for large organizations. But the reason that I got involved with this is because we are putting a dome on our stadium. Part of this project includes
56 skyboxes. So I was very, very concerned when the House bill came out and said you could no longer take skyboxes as a tax deduction. That bothered the hell out of me, frankly. Let me give you some steps, at least to what we went through, to try to learn as much as we could about the legislation; how we might be able to impact it.
First of all, our first step was to learn as much as we could about the proposed legislation. I went down to one of our local CPAs and I had him explain to me in layman's terms exactly what this was going to do as far as 1) the IRS ruling, 2) charitable deductions. He gave me an analogy that I will share with you. He said fi you go to your church and make a contribution to your church, and later that day your minister invites you to his home for dinner, under the stretch of the IRS ruling you probably may not be able to take that contribution to your church as a deduction, because you received something back in kind. Now that kind of struck hard at me. That doesn't make any sense to me. But that is exactly what these people are after right now when your donors receive something back in kind. They are trying to take away the charitable deduction. So you have to be very, very concerned about this.
What should I do next? On our campus, I had to have the president's approval, and I bet you will on yours as well. You better go check with your boss and make sure he or she doesn't have something going
with your Congressman or with your United States Senator that you don't foul up. They have these crazy ideas
about how academics are more important than athletics. Sometimes that can get you in deep tapioca if you
go out and try to contact your U.S. Representative or your United States Senator without your boss knowing about it. So I got our boss's approval. Then we have a governmental relations person on our campus. and while she works primarily with the Oregon legislature. she also works with our United States Representatives and our United States Senators. So I had her sit down and explain how all of these little different
things work to us because Senator Packwood is a key person for us. What pushed his buttons? What were the kinds of things that Senator Packwood was most interested in and secondly. tell me about the people on his staff? We wanted to know all about those people who work for the Senator. Who influences. who drafts that legislation? We went back and found out where they went to school. You would be amazed how many people work for your United States Senator and how many work for your United States Representatives. They have a lot of people working for them.
There are different ways that you can get to them. We got to them by first, using our alumni contacts. We wanted to know where they went to school. We used friends of the university who went to school with them, or knew someone who knew them. Secondly, we cultivated them and our Senator's representatives just like
we would a donor. Believe it or not, you have a lot more influence than you might think on your United States Senator or your United States Representative. It isn't just a coincidence that around election time they are showing up at your contests. They want to be introduced at the SO-yard line at your football games. They want to ride in your homecoming parade. It's because we all represent large constituencies. They like to be around us and they certainly have some things that could help us.
Anyway, once we learned as much as we could about their staff, we went to work on them and we tried to find out what the Senator was interested in. It turns out in our case that Senator Packwood was extremely interested in women's athletics. So we had our people set up a meeting and we had kind of a strange alliance. Harry Glickman, the vice president of the Portland Trailblazers, is an Oregon Duck and a good friend of Senator Packwood. We arranged a meeting with the Trailblazers, the Ducks and the Beavers. We sat down and talked to them about what the problem was. Then we followed that up with a separate meeting where I brought Kathy Hayes. For those of you who were at the meetings in New Orleans, you saw Kathy Hayes win one of the Top Six awards in the NCAA; a brilliant student-athlete, an all-America national champion with a 3.97 in biology. I sat down and explained to the Senator, that in Oregon at least, all of our revenues came from two sports; football and basketball. If you took away charitable deductions, it wasn't going to really impact football and basketball nearly as much as the nonrevenue sports, the women's sports. He sat and he talked to Kathy Hayes and a realization came to him that track and field doesn't generate a heck of a lot of money. Neither does tennis, neither does golf, but they are all very important sports. If we want to have those continue, we can't take away the charitable deductions for football and basketball; He got the message. Those are really important things to remember.
Next, you've got to make a good case with your United States Senator and you've got to do it in a very short concise period of time. I was told those are pretty lengthy meetings. Congressman Dicks, maybe you
can comment on that, but they were important meetings. We did it in a unified way. We explained to him that when people think about skyboxes, they think about Magic Johnson's salary or they think about Al Davis. But that isn't really who we are talking about. We are talking about thousands of student-athletes who are not Al Davis, who are not Magic Johson, yet their grant-in-aid is going to be affected if charitable deductions are removed. That is the kind of argument we made. I'II bet your Congressman or Senator can understand.
The last thing that the Senator really stressed with us is that we have to stay in touch. I know those people on his staff now so well that we can tell stories about each other and to each other. They are tired of hearing me call, but they all know who I am now. You should have the same kind of relationship if you want to have those things happen. I know we talked briefly about Senator Symms from Idaho, but we do need the people from Idaho to come up here after this meeting because there is legislation he is going to draft that is really going to have an impact on us. So Bill and Gene, we need to have you up. Is anybody from Louisiana here? Anybody from Arkansas? They are key players right now in legislation that is going on today. We need to have some help from you and from the rest of you. You need to establish a relationship, because it's very important to what's going on right now. Thank you.
You've heard from our attorney and from our contact person in Washington, D.C. You've heard from
one of our own about how he went about doing someting. All of us need to get on the team and really produce in this very important area. The next gentleman I am introducing to you is a close friend of mine. He is a former football player at the University of Washington. He has been a Congressman for 10 years from the state of Washington. He is a friend of intercollegiate athletics. He is a friend of yours. He is a friend of mine. Please welcome the Honorable Congressman Norman Dicks.
Thank you Mike for that very generous introduction. I am glad to be here with Phil and Bill. By the way, I'll tell you Bill, if you ever get tired and if things don't go well for you at the University of
Oregon, I think we could use you in Washington, D.C. That was about as good a primer on how to deal with the Congress that I've ever heard from someone who isn't that involved. 1 went back to Washington, D.C. in 1968 when I graduated from law school, and at the time, Richard Nixon was interviewing Henry Kissinger at the
Pierre Hotel in New York and Lyndon Johnson was Bitting down at the White House getting ready to turn over the reins of power. So I have had some experience on both sides of the Hill. When I first got to Congress I
was very lucky because the year before, they had thrown out a couple of old committee chairmen and freshmen were treated in a way that they'll never be treated again. They offered me, because I had this experience
on the Senate Bide and I had very strong friends in the House, to be either on the Ways and Means Committee
or on the Appropriations Committee. Well I've got a district that has got so many defense bases in it, if I didn't take the Appropriations Committee, I would have been in deep trouble. I turned down the Ways and
Means. Of course, Ways and Means is the committee that deals with the issue that you are concerned about.
I must tell you I have been very impressed. Mike Lude contacted me back in 1984 when we had this first revenue ruling and I had a lot of fun. I went down to the IRS. The IRS doesn't have a very good reputation on the Hill for obvious reasons. In fact, someone once said about the IRS, those are the people who come
on the field after the battle and shoot the wounded. So, having just gotten beyond April IS, we the wounded try to pick ourselves up. That was kind of fun because I could go down there with righteous indignation and tell them about how I had gone to the University of Washington on a joint academic and athletic scholarship.
If it hadn't been for that scholarship, I never would have gotten out of Washington. Now I am in the Congress. I even got a student loan. I also paid it back. There was some applause for that. We are working on that issue as well. It was fun to go down there and represent your case. I must tell you Phil Hochberg has done a great job working with the Congress and coordinating with us and talking with our staffs in order to give us the best information about how these issues really affect you.
At the University of Washington, of course, Mike has got a great program out there and the scholarship program is critical. This whole question of preferential Beating has been at the heart of the question about charitable contributions. Actually, we've won a major victory in getting them to take back the original ruling which would have said absolutely no charitable contributions. Now they've come up with a ruling that we probably could live with unless we can get a better position out of the Senate. Now let me just lay this out to you. This week is it. The Senate of the United States is considering the Tax Reform Bill. That Bill has already passed the House of Representatives so it's gone. It's out of the House. It's in the Senate. This morning I talked to Senator Symms' assistant. Now one of the things that Bill is really correct about, for all of you who may get called in this week, we may be asking you to pick up your phone and call your two United States Senators. If you can't get through directly to the Senator, then you ask for their legislative
assistant who deals with tax legislations. Everyone of us in Congress has somebody who is responsible for
that legislation. What you want to do then is to lay it out to them very simply. We understand that Senator Symms or Senator Pryor is going to have an amendment on the floor that would help us. It clarifies the problem on charitable contributions. It's revenue neutral. It's not going to cost the taxpayers anything because
this is the existing practice. Lay it out to them and Bay you would really hope that they get this message
to their bosses and ask them to support it. That's the kind of grassroots effort that we may be calling upon you to use.
Once this bill goes through the Senate, it goes to what we call a Conference Committee. The Conference Committee is the senior members of the Senate Finance Committee and the senior members of the House Ways and Means Committee. They get in a room right across the table somewhere in the Capitol and they go through all of these issues. The skybox issue was mentioned, and unfortunately, the House bill doesn't treat skyboxes
very well. So at some future point this will be a conference item. The Senate has one version. The House
has another. They've got to iron that out and come up with a common understanding. So at some later point we may want you to be calling the senior members of the Ways and Means Committee that will be on the tax conference. The issues that we don't get sorted out in the Senate have to be resolved in the House-Senate Conference. The skybox issue is one of those and it's a very important issue. I talked to Senator Symms
this morning and they have drafted a bill that would in a sense put into law the existing arrangement, whereby the price of the tickets are not deductible, but say your tickets are $200 and you give $1,000, the $800
would then be a charitable contribution. That would be the best possible solution. The bill that Senator
Pryor and I introduced would repeal this IRS ruling, but all that does is leave you in the situation where the IRS comes up with another ruling. Frankly, you are going to have to look at your whole card on this and decide if you really want to roll the dice again on another possible IRS ruling or do you want to accept this one unless you can get the Symms bill through which would take you back to the original situation. In my judgement, that is the preferred option.
First of all, I'm trying to get through to Senator Symms myself and make sure that he is going to go and offer this amendment. If he does, there are two key people. Bob Packwood is chairman of the Senate Finance
Committee, a Republican from Oregon. Bill has told you about his contact there. The ranking Democrat on the committee is Russell Long, former chairman of this committee when the Democrats were in charge. He is in
his last term of office and has announced his retirement. He is the ranking Democrat. The ideal situation for us would be for Senator Symms and Senator Pryor to offer this amendment on the floor of the Senate and ha' Senator Packwood and Senator Long accept the amendment.
Now there is also one other person who plays a role in this and that is Senator Metzenbaum of Ohio
who is kind of a watchdog of special interest legislation. The question then becomes whether Senator Metzenba1 will object to the acceptance of this Symms amendment. That's basically the strategy. So that is why Senat, Pryor from Arkansas and Senator Symms from Idaho are the two people we want to offer the amendment. Then the two key players are Bob Packwood and Russell Long. So any help that you can give Bill, Phil or Mike in terms of your ability to contact any of those four people, I think is very, very important to one, make sure the amendment is offered and two, to try to get it accepted. That's why we need to know how many of you can contact your Senators directly by picking up the phone.
I didn't come here to patronize all of you, but I can just tell you that, at least in the state of Washington, the athletic director's call means a lot to the Congressman and Senators from our state, because you are very important people. You have a lot of contacts in the community. The people who are donating money to these universities are very important constituents and the last thing any Congressman or Senator wants to hear is that the athletic director at the University of Washington or Oregon or wherever, is upset because they didn't get help when their issue was considered by the House or the Senate. I think you've got
a lot of clout. The other thing is, you are well known in the community, so when your call goes in, it makes a difference to the Congressman or the senator and to his staff. Bill has quite properly outlined how you make this call. Try to get to the Senator or the Congressman directly. If you can't get them, then ask for their legislative assistants dealing with tax matters.
I think we are going to open this up for questions and answers. At this point when I am making a
speech. I always say we will use the rule of the United States Senate. and that is. anything you ask or say need not be relevant or pertinent to anything that I've said. but Mike is running the meeting. I'm glad to be here today and we are going to work on this. I pledge to you that if we can be successful in the Senate. I will do everything I can to contact the members of the House-Senate Conference with your help and see if it will accept the version of this bill as it comes out of the Senate. Thank you for having me here. good luck
and have a very successful meeting. College sports means a lot to me. I think that it gave me a good solid foundation for my work in the Congress. I've enjoyed my years of working and friendship with Mike Lude and thl University of Washington. I'm glad to be here. and in a small way. pay back for the great experience I had in college athletics.
Thanks a lot Norman. We are ready for questions, and I would assume that many of you have them, because you have talked to me about questions. Now I've got the first team up here to help you with those questions.
Congressman Dicks, can you tell us how soon there might be a Conference Committee meeting assuming the Senate proceeds this week with the bill?
Well, I would assume this is the President's number one priority and also a priority for the Congress. I would assume they would attempt to go to a conference immediately. Now it could be a very difficult Conference Committee between the House and Senate because the bills are different. On the other hand, there are a lot of people in the House who are attracted to the Senate bill because of those very low rates in it.
It gives a little more in terms of tax relief to the individual. So, I would think that from your perspective you had better plan that as soon as the Senate votes on this bill. I think the vote will be unanimous, or close to unanimous. You better count on a House-Senate Conference right away. Phil and I are going to work out a list of the people who will be the conferees from the House side so that we can get some contacts made with them as well.
Before the next question, would you all pass those information sheets to the center isle and I'll have my trusted staff pick those up so that we have them. We need that information so that we can work on it now. Other questions; Please take advantage of this because this might be your only opportunity to really get into the mainstream of something that is vitally important to you. It certainly is to me. I wouldn't be
up here with this group of people if it were not really significant about our flow of income at the Universit of Washington. I'm not going to require you to sit here all morning. but if you do have some questions, please let me know because I'm about ready to say thank you to these gentlemen if you don't. Anyother questions?
How soon will we know something about that amendment? What I am trying to do is get through to him to see just how he intends to proceed.
NORMAN DICKS :
The amendment has been drafted. It's prepared to made the contact with Bob Packwood a~d Russell Long to thing. If they will accept it, then we have got a very That can happen at any moment this week. I had a call are going to try to alert you before this meeting is ov Senators, that can be done. I hope that a list can be who feels comfortable calling the two Senators from the
Any other questions or comments? There are some copies that Phil has up here of Norm Dicks' hill and some summary statements. If you wish these, and I would assume that you would, please come forward. We thank you for your attention. Please give these gentlemen a round of applause.
be offered. We just have to find out whether he has see if they will accept the amendment. That is the key
good chance of it being adopted in the Senate side. into Senator this morning, talking to his staff. We er, so that if we do need you to contact other circulated at some point so that we can find out ir various states.