When my two worlds collide... Gators and taxes (I am a CPA).... Interesting ruling from the IRS Chief Counsel stating that most NIL Collectives do not fit under the 501(c)(3) provision. Aside from the general taxability of the collective themselves, the main repercussion of this is that any donations to the NIL collective would NOT be deductible to the donor. NIL Collectives Are Not Tax-exempt Organizations: Since the National Collegiate Athletic Association (NCAA) changed its policy to allow student-athletes to receive compensation for Name, Image, and Likeness (NIL), organizations referred to as "NIL collectives" have been established by boosters and fans to facilitate deals for the student-athletes. The stated purposes of nonprofit NIL collectives may include (1) raising awareness and support of the mission of the NIL collective and (2) compensating student-athletes for use of their NIL in the collective's activities. Some collectives may assist student-athletes with additional services, such as NIL activity reporting, tax compliance, brand development, and legal advice. In a legal memo, the IRS Chief Counsel determined that benefits provided by the NIL collectives were greater than an exempt organization is allowed to provide because compensation paid to student athletes for use of their NIL is a fundamental part of a nonprofit NIL collective's activities; therefore, most NIL collectives would not serve an exempt purpose under IRC Sec. 501(c)(3). AM 2023-004.
Great news! Giddyup!!! Now start taxing the NIL recipients, and do it pro-style where you have to pay taxes in every state you play games in. Let the destruction begin!
That's the interesting part, I don't think it should be taxed at the collective level, only when it goes to the athlete and then THEY pay the tax as income. I get that it's not a charitable donation. Makes sense but it may also deter some folks from giving to it.
Interesting enough, the NIL “gift” could create tax problems for low-income families — in much the same way that inheritance tax has broken the bank on some recipients, right?
They are not being paid NIL money for playing the game like a professional receiving a salary so this wouldn't apply.
Can. UF requires their athletes to report all of their earnings and then 1099’s them for everything. Our gator made program helps them work through all the tax issues and money management. All schools may not have a system in place to handle all that for them though.
I think we can make a case that it does. It's a sponsorship deal and you (the sponsor) are trying to reach eyeballs in that state. Thus, this was the point of the NIL deal in the first place, to advertise your product to as many eyeballs as possible. Or, are you saying that wasn't the point? Sure you want to go there? Because now it does feel like a salary since there is no real marketing benefit to the sponsor/booster. I really don't care how they do it, I just want to see the entire NIL system crushed under its own weight.
Players are being paid by a 3rd party for NIL, not the university for playing the game. Of course you want NIL destroyed but no matter what you want the players going forward will always be able to capitalize on their NIL. If its not through a collective it will be direct from business to player or a monetized social media. The supreme court will side with the players in any future rulings when it comes to them receiving compensation for their NIL. I also suspect at some point athletes will become employees and be granted the ability to form a union. College football will never go back to what you want.
I don't think an estate (inheritance) is taxed until it gets into the millions and at that point, one has the coin to pay the tax
You're probably right but states like California already have exit taxes on net worth. I'm 100% sure they can figure out how to tax it.
I think you're right to a certain extent but I also think the majority of NCAAF programs won't really be competitive with the ones who can pay players millions, so unless you're a fan of a top 15 or 20 program, in revenue, this whole thing doesn't really impact you. The fans of top revenue programs will get an NFL style experience where rivalries are gone and the schools themselves are affiliated pretty much in name only as they need the name recognition to be profitable, since they're not really a professional level product. Most programs will continue to get dominated (although in a more exaggerated fashion now) by the top 15 or 20 and either accept it or form their own group. I think that's the long term goal too. Two conferences, a long playoff and a championship game, just like the NFL.
It's not about siding with the players, it's about breaking the system financially. And I think that's very doable/possible. Eventually boosters are going to get sick of being hit up by 18yos and NIL call centers.
Yeah, I mean I always thought that the NIL money WOULD be from a private business to an individual. What is the collective really for except a way to gather smaller amounts of money for distribution without a benefit to the donors in return? No appearing on a local chevy dealers commercial or print ads for Burrito Brothers or Nike? Seems ripe for some skimming off the top by the collective.
You CAN do that. But, yeah, it's pretty much a way to collect small donations from boosters then package them and direct the funds to the players you value most. Sounds like a salary to me.
Me too, I still don't know what service the player is providing for whatever business other than playing football. Haven't even heard of sitting for autographs or anything.
That was the problem with legalizing personal service contracts. The value is determined solely by the person paying the contract.
Yeah but isn't that how it's supposed to work? Wouldn't Tim Tebow sitting for autographs or doing a car commercial be able to negotiate more money than a walk-on Olineman?
