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TAX

‘The key is to plan of all college athletes across 200-plus schools in all
three divisions have signed an NIL deal. How can
ahead and make firms help potential clients manage the millions
of dollars being funneled to 18- to 23-year-old
college athletes?
sure to reserve ics services leader at Florida-based CPA firm James
Katie Davis, CPA, partner and collegiate athlet-
Moore and Co., sees many opportunities for firms
enough cash to to assist student-athletes with their tax education,
planning, and preparation.
“Bringing a value-added service to colleges and
pay the taxes due.’ universities to educate student-athletes on the tax
planning and fiscal responsibility of NIL is our first
step,” she said.
Deann Newman, CPA, a retired Deloitte tax partner While many of the NIL education engagements
are combined into other services that James Moore
offers to the universities they work with, Davis
business entities that pool money from alumni and sees an opportunity for firms to team up with local
About the athletic boosters to fund and facilitate NIL deals. collectives as well.
author Most NIL collectives are for-profit, but some have “If your firm has a strong SALT [state and local
Jacob T. Crowley, filed for Sec. 501(c)(3) tax-exempt, not-for-profit tax] practice, reaching an agreement with your local
CPA, is an assistant status. university’s collective to offer tax planning and
professor of Now, more than ever, student-athletes need help preparation and even financial planning as part of
accounting at when it comes to tax planning and financial literacy the collective’s NIL offerings makes sense,” she said.
Ohio Northern (see the sidebar, “Tips for Student-Athletes”). As While collectives are relatively new, they have
University in Ada, part of the ruling by the NCAA board of directors, already garnered controversy. Some overseers have
Ohio. student-athletes are not considered employees of expressed concerns that they may raise the stakes
universities or NIL entities. Rather, they are inde- for student-athletes’ recruitment and transfer and
pendent contractors, and the companies sponsoring create a “pay-for-play” environment. Based on the
them are not required to withhold or remit federal current interim policy approved by the NCAA,
or state income tax, Social Security tax, or Medicare collectives are not to be included in the recruiting
tax. This opens a plethora of tax implications for process and are to be completely separate, unrelated
young and busy student-athletes who possibly don’t entities from universities. That said, NIL still can be
have the resources or knowledge to navigate this a factor in athletes’ decision to attend a university.
intricate tax space. For example, Savion Washington, a recent trans-
fer student-athlete at the University of Colorado,
HOW CPAs CAN HELP said, “NIL opportunities tend to follow larger and
CPA firms now have an untapped market of new more competitive schools. My decision to transfer
clients as well. According to ESPN, around 25% to University of Colorado was based on the fact

IN BRIEF CPA tax practitioners’ help in managing both federal and state income tax as
and planning for the consequent tax well as, in some cases, self-employment
■ Easing of a long-standing prohibition liabilities they incur. CPAs may also tax.
in recent years against student-athletes be engaged to provide services to ■ Affected student-athletes can also
receiving compensation for their name, NIL collectives, entities that fund and seek assistance from their colleges and
image, or likeness (NIL) has led to facilitate NIL deals. universities. Resources may include
lucrative commercial deals for some ■ Like other payments and compensation, accounting faculty members, financial
students. both cash and in-kind, NIL income is aid offices, and Volunteer Income Tax
■ Students with NIL contracts may need generally taxable to the student for Assistance (VITA) programs.
To comment on this article or to suggest an idea for another article, contact Paul Bonner at Paul.Bonner@aicpa-cima.com.

28 | Journal of Accountancy April 2023