Paul L. Caron
Dean





Wednesday, June 14, 2023

IRS: Contributions To Nonprofit 'Name, Image And Likeness' Collectives Are Not Deductible Charitable Gifts

The IRS Office of Chief Counsel last week released a memorandum (AM 2023-004) concluding that contributions to nonprofit “name, image and likeness” collectives paid to college athletes generally are not deductible charitable gifts:

IRS Logo 2[I]t is the view of this Office that many organizations that develop paid NIL opportunities for student-athletes are not tax exempt and described in section 501(c)(3) because the private benefits they provide to student-athletes are not incidental both qualitatively and quantitatively to any exempt purpose furthered by that activity.

Wall Street Journal, IRS Nixes Tax Edge for College-Sports Booster Groups Paying Athletes:

The memo is a sign that the IRS will deny many collectives’ applications for charitable status and will begin revoking some prior rulings through audits. It creates significant uncertainty for athletic departments and the collectives that have sprung up since 2021, when the NCAA changed the rules in the wake of a flurry of states changing their laws to allow for athlete endorsements and the Supreme Court decision in NCAA v. Alston. ...

What happens now isn’t clear and may vary depending on the activities of each collective. Some organizations may have their charitable status revoked prospectively, while others may lose it retroactively if their actions varied greatly from what they said on their applications to the IRS, tax lawyers said.

https://taxprof.typepad.com/taxprof_blog/2023/06/contributions-to-nonprofit-nil-collectives-are-not-deductible-charitable-gifts.html

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