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Tax Implications of Student-Athlete NIL Deals and Collectives: Federal and State Tax Issues, Planning, and Reporting

Recording of a 90-minute premium CLE/CPE video webinar with Q&A

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Conducted on Tuesday, July 11, 2023

Recorded event now available

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This CLE/CPE webinar will provide tax professionals guidance on the key tax considerations for student-athlete name, image, and likeness (NIL) deals and NIL collectives. The panel will discuss the applicable rules and regulations for NIL deals and entities engaging in these transactions, federal and state tax challenges, reporting requirements, and tax planning for student-athletes. The panel will also discuss the tax implications for NIL collectives in college sports, for both athletes and universities, for-profit entities and those that obtained tax-exempt 501(c)(3) status, and other issues.

Description

In National Collegiate Athletic Association v. Alston (U.S. 2021), the Supreme Court unanimously ruled that NCAA rules prohibiting student-athletes from leveraging their NIL for financial compensation violate federal antitrust laws. While the landmark decision opened up financial opportunities for student-athletes, those executing NIL agreements face significant federal and state tax implications, including income tax responsibilities, state nexus, and reporting obligations.

Under the NCAA interim policy, student-athletes can be compensated for endorsements without putting their NCAA eligibility at risk, but other forms of payment remain prohibited, such as payment to athletes by the schools for their performance. As a result, many student-athletes receive monetary compensation and/or goods by entering into contracts to promote and market their NIL.

Generally, both monetary and non-monetary compensation are considered taxable income. This forces student-athletes to consider the tax implications, reporting requirements, and available tax planning options if they are benefiting from their NIL. Tax advisers for companies, universities, and athletes must keep in mind the various federal, state, and potential issues stemming from NIL agreements.

Listen as our authoritative panel examines applicable rules and regulations for NIL deals and entities engaging in these transactions, federal and state tax challenges, reporting requirements, and tax planning for student-athletes. The panel will also discuss the tax implications for NIL collectives in college sports and those with tax-exempt 501(c)(3) status, and other issues.

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Outline

  1. NIL regulations and policies
    1. Recent cases
    2. NCAA interim rules
    3. State laws and school policies
  2. NIL collectives
    1. How are they structured?
    2. Regulatory framework
    3. Tax-exempt NIL collectives
  3. Tax considerations for student-athletes
    1. Federal tax considerations
      1. Sponsorship and service income
      2. Cash awards
      3. Royalty income
      4. Impact on financial aid
    2. State tax implications
  4. Best practices for counsel and advisers structuring NIL agreements

Benefits

The panel will discuss these and other key issues:

  • Current rules and regulations allowing student-athletes the ability to endorse goods and services
  • Types of NIL deals and key tax considerations for student-athletes, universities, and companies
  • Best practices for attorneys and advisers structuring student-athlete-involved NIL agreements
  • Navigating the federal tax rules, reporting requirements, and available tax planning strategies
  • NIL collectives and special rules governing tax-exempt NIL collectives
  • Key state tax considerations for student-athletes and companies

Faculty

Cahill, Ben
Ben Cahill
Principal
CliftonLarsonAllen

Mr. Cahill is a Tax Principal in CLA's St. Cloud, MN location focusing on taxation of professional athletes as well...  |  Read More

Milton, Mark C.
Mark C. Milton
Attorney
Milton Law Group

Mr. Milton started his career as a Trial Attorney with the Department of Justice Tax Division, in Washington, DC, via...  |  Read More

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