It is not difficult to maintain tax-exempt status, but it is not difficult to lose it either. Many name, image, and likeness (NIL) collectives are forming as 501(c)(3), examples include Texas Tech’s The Matador Club and Northwestern University’s TrueNU. In this structure, donors to the collective are receiving a tax write-off while the athletes being paid by the collectives, must pay taxes on the money they receive.
While some states like Texas require athletes to take financial literacy workshops during their first and third years at university, not all states have this requirement, so with tax season approaching they might find themselves in trouble. If you are a college athlete, please see this article and the free tax and legal services available to you.
The IRS put out an article entitled: “How to lose your 501(c)(3) tax-exempt status (without really trying)” which lays out the six areas 501(c)(3) organizations should be mindful of when operating.
🧵How to lose your 501(c)(3) tax-exempt status (without really trying)
NIL Collectives that have formed as 501c3’s should be cautious in their actions as to not lose their tax-exempt status.https://t.co/rbLfKs7AWC
— 𝑨𝒍𝒆𝒙 𝑺𝒊𝒏𝒂𝒕𝒓𝒂 𝑬𝒔𝒒. (@YourPotential4) March 8, 2023