Wednesday, April 24, 2024

NCAA Rule Change Helps NIL Workarounds

Sure, We Train Employees (wink, wink) - Business LockerRoom

I told you last summer, as the Service worked to put the kibosh on tax exempt NIL collectives, that athletic directors were meeting in Orlando to consider alternatives to tax exemption by which donors could still claim charitable contribution deductions and college sports and talent agencies -- popularly known as NIL collectives -- could still retain tax exemption.  The simple plan would be to bring NIL operations inside the university's athletic department.  Like any other career services office that helps students find jobs on campuses everywhere (wink, wink).  Donors could continue making big donations to the department's "general fund," (wink, wink), and claim the charitable contribution deduction so long as the donation was not earmarked for a particular recruit (wink, wink).  The private benefit characteristic of NIL collectives would then only constitute a very small percentage of the entire budget.  For stand alone NIL collectives, nearly 95% of "donations" (wink, wink) are funneled to recruits for endorsements and such.  Bringing the operation in-house would allow schools and donors to operate sports and talent agencies tax free with charitable contribution (wink, wink) deductions.  

That's where things are headed, especially after a rule change adopted by the NCAA D1 Board yesterday:

Effective immediately, Division I student-athletes have access to additional school assistance with name, image and likeness activities and more flexibility to transfer, the Division I Board of Directors decided Monday when it affirmed action taken last week by the Division I Council. Schools can identify NIL opportunities and facilitate deals between student-athletes and third parties. Student-athletes are not obligated to accept assistance from the school and must maintain authority over the terms in their NIL agreements. Beginning Aug. 1, member schools will be permitted to increase NIL-related support only for student-athletes who disclose their NIL arrangements.  

I don't think the NCAA is intentionally seeking a tax workaround.  Its just trying to hang on to D1 football and basketball in light of increasing commercialization wrought by antitrust and labor laws.  But its a workaround alright.  Keep that on the QT.

darryll k. jones

https://lawprofessors.typepad.com/nonprofit/2024/04/ncaa-rule-change-helps-nil-workarounds-wink-wink.html

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