Tuesday, April 7, 2015
Kathryn Kisska-Schulze (North Carolina A&T) & Adam Epstein (Central Michigan), The National Labor Relations Board v. Northwestern University: Cultivating a New Era for Taxing Qualified Scholarships, 49 Akron L. Rev. ___ (2016):
On March 26, 2014 the National Labor Relations Board (NLRB) ruled that Northwestern University’s scholarship football players are employees of the institution and can unionize and bargain collectively. From a federal income tax perspective, the significance of the NLRB decision could redefine the principal that select student-athletes are no longer unpaid amateurs receiving qualified scholarships, but instead are employees of their institutions earning scholarship funds in exchange for services rendered as college athletes.
Accordingly, a crucial question arising from the NLRB holding is whether the IRS can logically continue to treat qualified scholarships received by student-athletes as excludable from gross income. To analyze the potential effects of federal income tax on qualified scholarships, this article provides a brief judicial history of the pay-for-play model, analyzes the language of the Internal Revenue Code as it applies to qualified scholarships, evaluates the potential characterization of student-athletes as employees, and concludes that defining student-athletes as employees of their institutions could cultivate a new era in taxing qualified scholarships from a federal income tax perspective.