A decision by the Supreme Court last week on whether advertising revenue from nonprofit journals is taxable has left many association executives baffled.

In the case, U.S. v. American College of Physicians, the court ruled that ACP could not receive a refund for taxes it paid on its technical journal's advertising revenue, but the decision has left a loophole whereby ads that relate directly to an issue's editorial content could qualify as tax-exempt.

The ACP case has been closely watched by nonprofits since 1979, when ACP first filed for a refund with the Internal Revenue Service for taxes on advertisements placed in its technical journal, The Annals of Internal Medicine.

The ACP argued that its ads were extremely technical in nature and thus contributed to the educational purpose of the association, so should be exempted from taxes.

The IRS refused to refund the taxes, and in 1982 ACP filed suit against the agency in Claims Court in Washington.

That court ruled against the association, but the ruling was reversed upon appeal in September 1984.

The Supreme Court last week voted against the ACP in a 9-to-0 decision.

Association sources agreed that had the Supreme Court ruled in favor of the ACP, any nonprofit that published a technical journal could have been waiting on the doorstep of the IRS looking for a refund.

Instead, the decision has left many association executives puzzled and waiting for further analysis before they decide whether to try to comply with the court's rather vague rules on advertising and then apply for a refund.

The decision did leave the door ajar for associations that meet the court's criteria, said ACP's attorney, John B. Huffaker.

He noted that the decision allowed as exempt advertising that was "substantially" related to the educational function and the editorial material in a journal.

But, Huffaker pointed out, there were no specific guidelines for associations to follow and, therefore, the decision was vague.

An analysis of the decision by the American Society of Association Executives agreed with the court that the solution to the problem lay with the executive branch and Congress rather than the courts.

"The bottom line," read the ASAE statement, "is that all claims for refund will automatically be denied by the IRS based on this case, and the decision is so vague that it is difficult to enunciate an appropriate and precise method of dividing an association's publication between the taxable and nontaxable.

"The concurring judges are probably correct that it is up to some other branch of the government."

James J. Albertine, ASAE's director of government affairs, said that the association will continue to evaluate the decision and urge Congress to address the issue.

ASAE's analysis suggested that "the court held that an organization could control its publication in such a way as to reflect an intention to contribute importantly to its educational functions.

"If it could be demonstrated that this were the case, the advertising income would not be taxable."

Huffaker said that ACP had not yet decided whether to comply with the rules and require advertisers to run ads only if they relate to a story published in that edition of its journal, or to attract unrelated advertisements, such as hotel and travel ads, that would be subject to tax but would produce more revenue.


Officials at the Senior Executives Association in Washington have announced that Carol A. Bonosaro, chairman of the group's board, will assume the position of executive director for the next six months, following the resignation of Blair Childs. Bonosaro has been on loan to the association from the U.S. Commission on Civil Rights, where she is a senior executive, until the SEA board decides on a permanent replacement. The 2,210-member association represents top federal government career executives.

The National Association of Regional Councils recently completed a major staff reorganization that included the addition of four new staff members and the promotion of an intern. James Edgar, formerly of the Federal Executive Professional Association, will join NARC as its transportation, environmental and fiscal lobbyist, and Andrew Sperling, a staff intern, has become federal liaison in charge of human resources and development for the group. Carole Anne Boileau, who worked for the Retail Bakers of America as director of communications, joined NARC as its communications/marketing coordinator. Greg Garcia has joined the NARC staff as a member services associate. He was most recently an intern in IBM's governmental program. On May 1, NARC's reorganization will be complete when John Linkous, the director of the District Program with the Appalachian Commission, comes on board as deputy direc-tor for the group.

The American Association of Homes for the Aging has established a professional certification program for managers of housing facilities for the elderly. To qualify for the program a person must be 21, a high school graduate with at least three years of management experience, or a college graduate. Completion of the program requires 42 hours of classes covering such topics as "Administering the Retirement Housing Community" and "Management and the Aging Resident." For more information, contact the AAHA Professional Development Institute at 1129 20th St. NW.

The American Consulting Engineers Council in Washington recently recognized Kamber Engineering Inc., of Gaithersburg, for engineering excellence. According to the ACEC, the firm created a wastewater treatment process that has measurably reduced the pollution levels in Dry Seneca Creek in Poolesville, Md.


William R. Miller, vice chairman of the board for Bristol-Myers Co., has been elected chairman of the board for one of the country's leading pharmaceutical trade groups based in Washington, the Pharmaceutical Manufacturers Association.