NIL money and tax liability

I am sure it is subject to taxation and that makes it even dicier. No withholding, probably 1099'ing it? Kids who haven't ever thought about taxes in their lives are having to pay it on several 100k a year in some instances? That's a pretty large tax bill on federal alone.

 

Even worse if it’s subject to Self-employment tax.

 

Good point. If the money you are making is for promoting products, etc., then you would have to pay self-employment, tax and, potentially, make estimated tax payments, on top of paying any remaining unpaid taxes for the year.

 

And that could easily reach 25% on, say, 200k, if you aren't smart calculating business deductions. That's a lot of cash when you haven't been making quarterly payments and probably helping out your folks or friends here or there, plus blowing money like any 18-22 year old kid does.

One thing I have been pretty bullish on (in addition to freshmen ineligibility for NIL--to keep it out of the high school recruiting game--and some form of profit sharing--to give all kids on scholarship a cut of the massive broadcast/licensing pie) is that all private commercial NIL deals be funneled through the schools themselves, not these independent collectives. That way the school has a responsibility to educate kids on compliance, amateur eligibility implications, tax liability, maybe even withholding taxes if that money is paid directly to the school before it touches an athlete's hands. There are thousands of minor changes the NCAA could propose that would shield players and the game itself. But we all know the NCAA only responds to laws it can't ignore, not to actual needs or responsibilities or obligations.

 

So, what needs to happen is you have a Freshman Money 101 course on finances and money management available to and even required for all athletes. Most of these kids haven't a clue about taxes, savings, investing, etc. And maybe the UAA can offer free money management and tax filing consulting for Gator athletes.
'Cause you just know some kids are going to be in hot water with the IRS very soon.

 

I’m guessing a number of kids will have IRS troubles in a few years, unless a major school like UF “educates” them or even handles their taxes for them (free tax services for “student athletes” as part of the package lol). But that would seem dicey considering none of the NIL stuff is supposed to be “pay for play” in the first place.

Under that pretext, should UF care what money its athletes are making as individuals - totally on the side and apart from UF or the UAA? Obviously on the practical side we know money is getting steered and we don’t want athletes getting in legal trouble, it’s just that the whole NIL thing as I understand it is supposed to be at the individual level and having nothing to do with the schools. This is just another can of worms opened up by this final corruption of “college” sports.

 

Or since most classes are also offered online, the athletes can just pay a tutor to take this class instead. Now that's the bigger microcosm of this whole system.

 

The UAA has set up the gator made initiative, which was set up to help the kids deal with all this stuff. Every school may not offer this, but UF does and was way out in front of it.

 

Likely getting 1099-misc if things on up and up and definitely getting a tax penalty if large amounts of money being paid cuz no one is paying estimated quarterly tax payments and no one will be withholding any funds for taxes.

top nfl picks - won’t matter and will be able to pay back taxes. Some others? Probably have some issues at some point.

 

If the “gator made” program is doing it’s job, our athletes should be fully aware of the quarterly payments that need to be made as well as any other tax ramifications, and the ramifications of letting unqualified individuals handle their money. I don’t know what other schools have in place for their athletes, but ours is at least attempting to help our athletes work through these hurdles.

 

That’s why these guys are getting agents at about the same time they are getting bar mitzvahed. They need someone to give them some direction.

 

I'm a little more curious when the UAA loses some or all of any tax exempt status, being considered a for profit business.

 

Why do you think they would lose any of that?

 

All of the Universities will (or at least should) if we keep going down this athletes as employees road we seem to be on.

 

The UAA and University are separate entities though, aren’t they? As long as the UAA continues to be run by volunteers, and the money goes back into running the “organization”, they’ll still qualify as an NFPO I would think. Remember NFPO is a little different than a nonprofit and has different rules.

 

There are different rules for public charities vs. private foundations but I don't have much insight into that rabbit hole. As for the UAA I believe they are a DSO of the University, so I don't know what that would mean as far as oversight. There is the UBI factor and if players were paid employees I'm not sure how UF could argue that the holding of paid athletic performances could be part and parcel of "education." However, somehow they have accomplished just that with their health centers that have metastasized all over the State directly competing with private physicians.

 

I went through the form to file as a 501c3 for an aquarium club once and there are plenty of detailed requirements that cover everycaspect of the organization. I suspect it's more of a matter of political will that will turn on a caveat of however they are organized.i remember when Senator Hatch raised question and nothing came of it. Since the SCOTUS has since allowed amateurs to receive NIL payments and the UAA and other originations are involved to varying degrees, I wouldn't be surprised if the issue of tax liability is raised by changes in political will and the IRS given how much money flows in these not for profits. Perhaps the NCAA isn't dead yet.