Tag: nil in texas

Three free tax and legal services for college athletes

The NCAA prohibits what services athletes can receive, but some universities are providing the services in unique and exciting ways.

Tax season is upon us and many college athletes will be filing their taxes for the first time as individuals. There are many things to consider when filing your taxes including dependency status, self-employment status, state tax obligations, financial aid implications, and more. However, there are many free tax preparation services available to college athletes.

There are free tax preparation services offered by the IRS, but they do have some requirements in order to participate in them. Many athletes will qualify for these sorts of free services. Be mindful, however, that you should discuss what is best for your tax situation with a qualified tax professional in your area. This article is for educational purposes only and not intended as legal or tax advice and should not be construed as such.

1. The IRS’s Volunteer Income Tax Assistance (VITA) program offer free basic tax return preparation to qualified individuals. This program offers help to:

  • People who generally make $60,000 or less
  • Persons with disabilities; and
  • Limited English-speaking taxpayers

2. IRS Free File lets you prepare and file your federal income tax online using guided tax preparation, at an IRS partner site or Free File Fillable Forms. There are two services available under this program. One program allows you to have guided tax help through free software if your adjusted gross income is less than $73,000. The other part of the program allows those who make over $73,000 the use of the IRS’ free fillable forms.

3. The NCAA provided guidance on what services the athletes’ institution can provide them and in some instances prohibited the athletes from receiving services like tax preparation unless all students had access to the services.

It is impermissible, under the Interim Policy/NCAA Rules, to “provide services (other than education) to support NIL activity (e.g., graphics designer, tax preparation, contract review, etc.) unless the same benefit is generally available to the institution’s students.” However, with programs such as VITA and IRS Free File, these services are public program that are available not only to students, but also to the population as a whole.

Another area college athletes need guidance and help is with the review and negotiation of their NIL contracts. The NCAA also considers this an impermissible activity and institutions can be found to have violated the NCAA rules and regulations if they provide this service solely to athletes and not to the student population as a whole. However, it doesn’t apply to institutions who are not NCAA system members.

For instance New York Law School (NYLS) does not have an undergraduate program connected with its school that has an intercollegiate athletics program. Therefore, they are able to provide pro bono legal services to athletes across the country, they currently focus on New York athletes due to licensing requirements varying through the country, without violating any NCAA rules and without jeopardizing the athletes’ eligibility.

The NYLS Pro Bono Project was born on July 18, 2022 to “to provide free legal assistance to athletes regarding their NIL activities.”

The NCAA released the NCAA Student-Athlete Well-Being Study – May 2022 which showed, among other things, athletes want to receive more educational resources.

“Fifty percent of the women’s sports participants and 49% of the male sports participants wanted more resources on tax literacy and education. In regard to navigating NIL opportunities, 42% of the men’s sports participants and 39% of the women sports participants said they wanted more educational resources.”

Athletes are humans first and the more the NCAA and other entities recognize that, the easier it will be to provide the resources these athlete so desperately want.

**Editor’s Note: This is not tax or legal advice and should not be taken as such. It is merely for educational purposes.**

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How to find how much money your favorite NIL Collective generated in 2022

A Step-by-step breakdown to view how much your favorite NIL collective is raising.

Name, Image, and Likeness (NIL) Collectives seem to be big businesses in the college sports ecosystem. Some are even forming tax-exempt 501(c)(3) organizations. These tax-exempt organizations have certain filing requirements depending on the gross receipts they generate. Most of these organizations must file a Form 990 with the IRS. See more about this here.

This is a step-by-step guide on how to search for these forms once they have been filed and made public.

For this example, let’s use the West Texas Matador Club, Inc., which is a Texas nonprofit corporation doing business as The Matador Club. Their mission is “helping Texas Tech student-athletes make a positive impact with their name, image, and likeness.”

Step 1: Head to the IRS website and search the legal name of the collective.

In this case, while the collective does business as The Matador Club, their website indicates their legal name is West Texas Matador Club, Inc.

Step 2: Click on the correct entity you want to review.

Step 3: Once the entity has filed their documentation, it should be available for download.

Step 4: For now, you can review the determination letters of collectives.

These letters indicate whether or not the collectives was approved for 501(c)(3) status and informs you which of the 11 deductibility codes they applied. The Matador Club was given the code of a public charity and approved for tax-exempt status. However, these organizations can easily lose their status, read more here.

Deductibility Code In general, an individual who itemizes deductions may deduct contributions to most charitable organizations up to 50% (60% for cash contributions) of his or her adjusted gross income computed without regard to net operating loss carrybacks. Individuals generally may deduct charitable contributions to other organizations up to 30% of their adjusted gross income (computed without regard to net operating loss carrybacks). These limitations (and organizational status) are indicated as follows: Code Type of organization and use of contribution. Deductibility Limitation PC A public charity. 50% (60% for cash contributions)

They are also required to file either a Form 990, 990 E-Z, or a 990-N depending on the amount of their gross receipts.

As Form 990s start rolling in, it will be interesting to follow along and see which collectives are bringing big donor money and which are merely scraping by with donations.

**Disclaimer: This is not tax or legal advice and should not be taken as such. It is merely for educational purposes.**

Proposed changes to state NIL law could give Texas schools a recruiting advantage

A proposed amendment in Texas NIL law could give Lone Star schools an advantage.

The NCAA issued its first infraction related to name, image, and likeness and improper inducement and improper facilitation. This infraction centered around University of Miami booster John Ruiz, the head women’s basketball coach, and NIL superstars Hanna and Haley Cavinder, among others.

As per the negotiated resolution, “women’s basketball head coach violated NCAA rules when she facilitated impermissible contact between two prospects and a booster, according to an agreement released by the Division I Committee on Infractions. In facilitating the contact, the head coach also violated rules on publicity before signing and, because of her direct involvement, she violated head coach responsibility rules.”

While many speculated whether the NCAA should have been focusing on this area of their regulations, others surmised this might be a hint of things to come. While the negotiated settlement did not hand down a punishment to the athletes or the booster, many believed the move to punish the women’s basketball program made the NCAA look bad.

The NCAA looks to be cracking down on schools that are toeing the line between permissible and impermissible activities, but it is unclear who or where the NCAA might target next.

When a state doesn’t have a NIL law, they follow the NCAA interim policy which in some cases is broader than state laws. This has led to some states amending or totally repealing, as is the case in Alabama, their NIL laws. Will changing the laws in your state make you more valuable to prospective college athletes? Only time will tell, but it seems that creating more athlete-friendly laws would be more appealing to athletes.

In Texas, high school athletes are not allowed to monetize their NIL which puts the state at a disadvantage and has caused some high school athletes to graduate early and leave the state so they can pursue deals earlier, see Quinn Ewers. However, recently House Bill 1802 was introduced which would amend the Education Code and allow those athletes competing in University Interscholastic League (UIL) the ability to monetize their NIL if they meet certain requirements. Although, the requirements rule out a large majority of high school athletes.

The UIL β€œexists to provide educational extracurricular academic, athletic, and music contests.” It is strange that this sort of change to ostensibly allow high school athletes to monetize their NIL is a change to the Education Code and not a change to the Texas NIL laws. This act β€œtakes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2023.”

In addition to this proposed change that could affect high school athletes, another House Bill was introduced into the Texas legislature to amend the NIL laws relating to college athletes. House Bill 2804 would make many notable changes in the law including allowing an β€œemployee of the institution, may identify or otherwise assist with opportunities for a currently-enrolled student-athlete to earn compensation from a third party for the use of the student athlete ’s name, image, or likeness”, with some specific restrictions. Previously, employees of institutions could not assist with NIL deals for college athletes. If this bill receives the requisite votes then it will go into effect July 1, 2023, however, if it does not, then it will go into effect September 1, 2023.

We will see states begin to amend their laws related to NIL monetization and some even repeal those laws, but with everything in the space changing so fast, what is the best move? New Jersey, for instance, has NIL legislation known as the New Jersey Fair Play Act, but it does not go into effect until 2025. High school athletes in New Jersey can also monetize their NIL as of January 2022.

This sort of approach seems to be the most logical so a state can assess the landscape without limiting the athletes’ and schools’ ability to navigate the new ecosystem freely.