Related Practices
On May 5, 2025, Sports Business Journal published an article from former IRS Commissioner and Shareholder Chuck Rettig and Andrew Mullendore, with significant contributions from Shareholder and former Counselor to the IRS Commissioner Tom Cullinan and Shareholder Steven Wyatt, discussing the Supreme Court’s decision in the National Collegiate Athletic Association v. Alston case and how it will impact student athletes.
Rettig and Mullendore explain how boosters for the student athletes established collectives for funding. “Collectives aim to maximize their capability to compensate athletes. Some collectives have pursued tax-exempt status to minimize tax erosion of the donated funds,” Rettig and Mullendore wrote. “While the NCAA has begrudgingly accepted this new student-athlete compensation landscape, the Internal Revenue Service has identified “tax-exempt” collectives as a targeted enforcement priority and has rejected four different applications by NIL collectives for tax-exempt status.”
They discuss how collectives can potentially suffice funding for the athletes, but there are ways to be compliant in doing so.
“The collective could change its model from supporting student-athlete compensation to supporting the operations of athletics departments. A collective that donates funds to support an athletics department’s operations gives the department flexibility to use those funds however it wishes — to support nonrevenue-generating sports, devote additional assets to its compliance and administrative operations or compensate student athletes for their NIL,” Rettig and Mullendore explain.
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