IRS issues opinion that NIL Collectives not qualified as tax exempt

[nick]

https://kpmg.com/us/en/home/insights/2023/06/tnf-glam-organizations-developing-nil-opportunities-for-student-athletes-generally-will-not-qualify-as-tax-exempt.html

https://www.si.com/college/2023/06/10/irs-name-image-likeness-collectives-not-tax-exempt

Quote

 

According to a memo released from the office of the IRS Chief Counsel, donations made to nonprofit NIL collectives “are not tax exempt” because the benefits they provide college athletes are “not incidental both qualitatively and quantitatively to any exempt purpose.”

 

 

Posting in the college board since this affects a lot of NILs, since a ton of them advertise as tax-exempt donations... I wonder how it will affect some of the smaller NILs

[ionel]

Makes sense.

[TwoPointsTakeDown84]

They should look into making themselves a church. No rules there. 

[TwoPointsTakeDown84]

Our Lady of Perpetual Exertion

[Tigerfan]

On 6/12/2023 at 1:54 PM, TwoPointsTakeDown84 said:

Our Lady of Perpetual Exertion

I met her, and it wasn’t in church. 

[ionel]

Is it true minnow reported that the Ferrari bros are going to start a new collective congregation called Flex Church? 

[Idaho]

It does make sense. 

Can the booster who is paying out for the NIL, write off the money as marketing for their business? 

[Husker_Du]

can someone explain this to me like i'm 5

[GreatWhiteNorth]

32 minutes ago, Husker_Du said:

can someone explain this to me like i'm 5

Like usual.

[DJT]

This will probably save athletic departments, because they were looking to be in a world of hurt due to NLI/collectives. If people could write-off donations to collectives, my guess, within five years, the only donations they’d be getting would be the mandatory donations by season ticket holders and people wanting their names on buildings. This will give athletic departments a leg up on getting more big donations from rich people who don’t like paying taxes on money they give away. Collectives will rely on smaller donations, since most of us peasants just do our taxes on TurboTax and take the standard deduction, anyhow.

[Husker_Du]

ah. thank you.

 

[Husker_Du]

23 minutes ago, GreatWhiteNorth said:

Like usual.

you still wear a mask, but yeah, i'm the simpleton. 

[GreatWhiteNorth]

14 minutes ago, Husker_Du said:

you still wear a mask, but yeah, i'm the simpleton. 

I still wear a mask?

You've just proven that you are a simpleton. 

Edited June 15, 2023 by GreatWhiteNorth

[Husker_Du]

shut up.

[GreatWhiteNorth]

4 minutes ago, Husker_Du said:

shut up.

That's a dick comment coming from a guy that just wrongly claimed I still wear a mask.

[Husker_Du]

you're a big mask guy

[GreatWhiteNorth]

13 minutes ago, Husker_Du said:

you're a big mask guy

Nah, you're just being a rude and offensive guy. You shouldn't be, you should be better.

Lord knows you have the choice. Choose to be better.

Edited June 15, 2023 by GreatWhiteNorth

[ionel]

8 hours ago, Idaho said:

It does make sense. 

Can the booster who is paying out for the NIL, write off the money as marketing for their business? 

A you saying having an athlete show up at your kid's birthday party is "marketing?" 

[98lberEating2Lunches]

8 hours ago, DJT said:

This will probably save athletic departments, because they were looking to be in a world of hurt due to NLI/collectives. If people could write-off donations to collectives, my guess, within five years, the only donations they’d be getting would be the mandatory donations by season ticket holders and people wanting their names on buildings. This will give athletic departments a leg up on getting more big donations from rich people who don’t like paying taxes on money they give away. Collectives will rely on smaller donations, since most of us peasants just do our taxes on TurboTax and take the standard deduction, anyhow.

"A charitable contribution deduction is not allowed for any contribution made after December 31, 2017, to a college or university in exchange for which the payer receives the right to purchase tickets or seating at an athletic event."(https://answerconnect.cch.com/document/arp109fc87418cc7c4e8c922122a0e6a38eb6/federal/irc/explanation/tickets-to-athletic-events-or-booster-club-dues-for-colleges-or-universities#:~:text=A charitable contribution deduction is,seating at an athletic event.)

Donations beyond that to a university's general student athletic fund remain tax deductible, if it is a 501(c)(3) organization which all are, and to the amount provided by the university in a letter to the donor.  That letter could theoretically consider whether the donor's points level was used receive the right to purchase a ticket in the tax year.

Implementation of the IRS position on donations to NIL collectives would, on its surface, appear to tilt the playing field back to Universities from NIL Collectives, when it comes to direct control of donor dollars.  But if the IRS has separately established a portion of a NIL Collective as a 501(c)(3) organization, then it will be deductible.  The IRS position did not addressing this.

The IRS position address "developing paid name, image, and likeness (NIL) opportunities for collegiate student-athletes."  501(c)(3) NIL collectives don't do this.  Rather they "typically use student-athletes as independent contractors to help further their charitable mission."(https://www.taxpayeradvocate.irs.gov/get-help/general/nil/nil-collectives/)

Also, individual state laws are changing to allow collaboration between NIL collectives and universities.  When this collaboration is allowed and to the degree tax deductibility is a material driver of atheltic donations, the new IRS position could still only hurt university athletic programs and more importantly their students athletes, if fewer donations result.

[Idaho]

3 hours ago, ionel said:

A you saying having an athlete show up at your kid's birthday party is "marketing?" 

"Happy Birthday kids.... and if you're looking for a new car in 15 years, be sure to go to Joe's Used Cars.... welp... see ya." 

[Idaho]

Like many other tax ventures, and with dealing with high bankrolls, I am sure there will be some end arounds. " I would like to donate to the collective (wink wink)....but it sure would be nice to have ___________ in our lineup next year (wink wink)."