IRS Guidance on NIL Collectives: Are They Tax-Exempt?

Two years ago, the National Collegiate Athletic Association adopted the interim name, image, and likeness (NIL) Policy. It enables student-athletes to personally be compensated for their sports ability and fame. 

In a new legal Advice Memorandum (2023-004), the IRS addressed whether developing NIL opportunities for college student-athletes serves a tax-exempt purpose.

NIL “collectives” have been set up by boosters and fans of college athletic programs to pay their schools’ athletes. The IRS guidance states that in many cases, such groups are “serving the private interests” of the students and are “operating for a substantial nonexempt purpose.”

Contact us if you have any questions about tax planning.

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