The IRS is addressing the increasingly popular way of paying college athletes. Guess it is never too early to start the “brand”…
Since the Supreme Court ruled that college athletes can be compensated for their name, image and likeness, college boosters have started to set up nonprofits to develop and fund or otherwise help to facilitate paid NIL (name, image and likeness) deals for student athletes. It’s always about the money.
Some groups vow to pay athletes up to 100% of the contributions the group receives. IRS has granted 501(c)(3) tax exemption to some of these NIL collectives in the past. Which seemed wrong in the first place.
Now, IRS lawyers say many NIL collectives operate primarily for nonexempt purposes by serving the private interest of the athletes, and don’t qualify for 501(c)(3) status. It’s income and thus taxable, no way around it.