NIL payments and public disclosures and taxes

[WestCoastWildcat]

There has been speculation about how much money individual players are receiving from NIL. I’m curious what disclosures about these payments may be considered public, especially for the state schools. Are NIL payments considered salaries that may be subjects to federal, state and local tax consequences? I don’t see how taxes don’t come into play when NIL payments are made. Normally there is transparency regarding state employee salaries- that’s how we know about the salaries of coaches at state schools and that many coaches are at the top of the list in many state employee salaries. Could NIL also include bonuses and performance incentives like coaches have included in their contracts? Are NIL agreements essentially legal contracts with players. It’s a Brave New World under NIL- and a pretty dark one at that.

 

[thewildcat2011]

There has been speculation about how much money individual players are receiving from NIL. I’m curious what disclosures about these payments may be considered public, especially for the state schools. Are NIL payments considered salaries that may be subjects to federal, state and local tax consequences? I don’t see how taxes don’t come into play when NIL payments are made. Normally there is transparency regarding state employee salaries- that’s how we know about the salaries of coaches at state schools and that many coaches are at the top of the list in many state employee salaries. Could NIL also include bonuses and performance incentives like coaches have included in their contracts? Are NIL agreements essentially legal contracts with players. It’s a Brave New World under NIL- and a pretty dark one at that.

It’s income, so it’s definitely taxable. Currently, NIL payments are not made by public entities (e.g., the actual schools themselves), so there’s no visibility. Yes, those entities do sign contracts with players.

 

[Just Gary]

It’s income, so it’s definitely taxable. Currently, NIL payments are not made by public entities (e.g., the actual schools themselves), so there’s no visibility. Yes, those entities do sign contracts with players.

But it is not the school (so not the state) itself that is the provider of funds under the current system. Not sure even state schools can require athletes to disclose their income from outside sources (At least not yet).

 

[thewildcat2011]

But it is not the school (so not the state) itself that is the provider of funds under the current system. Not sure even state schools can require athletes to disclose their income from outside sources (At least not yet).

Yes, that’s what I said.

 

[Just Gary]

Yes, that’s what I said.

Sorry. I misread your post. That happens when I post at 2AM.

 

[High Hopes Cat]

There has been speculation about how much money individual players are receiving from NIL. I’m curious what disclosures about these payments may be considered public, especially for the state schools. Are NIL payments considered salaries that may be subjects to federal, state and local tax consequences? I don’t see how taxes don’t come into play when NIL payments are made. Normally there is transparency regarding state employee salaries- that’s how we know about the salaries of coaches at state schools and that many coaches are at the top of the list in many state employee salaries. Could NIL also include bonuses and performance incentives like coaches have included in their contracts? Are NIL agreements essentially legal contracts with players. It’s a Brave New World under NIL- and a pretty dark one at that.

Not all but some NILs are structured as 503c3 charities so presumably there is some disclosure via 990 forms. Not sure about the for profit structures - guessing no detail required.

 

[hdhntr1]

It’s income, so it’s definitely taxable. Currently, NIL payments are not made by public entities (e.g., the actual schools themselves), so there’s no visibility. Yes, those entities do sign contracts with players.

Isn't it that the schools are not actually making the payments? As such how would they report it? Would they be getting W2s or 1099s?

 

[techtim72]

Schools don't report NIL payments. Whoever made and received the payments report it. 1099s from the payer to the payee. The payer and/or the payee may be incorporated or some other sort of legal entity in some instances. Welcome to business.