David Kaufman authored an article for Law360 titled "How NIL Collectives Could Be Tax-Exempt After IRS Curveball," published July 19, 2023.
The article discusses Nonprofit NIL Collectives, which aim to benefit student-athletes by monetizing their name, image, and likeness. However, the IRS recently released a memorandum stating that these collectives do not serve an exempt purpose under Internal Revenue Code Section 501(c)(3) and are thus not eligible for tax deductions. The IRS argues that the primary beneficiaries of these activities are the student-athletes, and the financial gain does not directly contribute to promoting charitable causes.
In the article, Kaufman points out that to potentially qualify for tax-exempt status, the NIL collectives could restructure to demonstrate that student-athlete compensation is incidental to achieving the organization's exempt purpose or consider bifurcating into a charitable entity and a for-profit entity. Different hybrid models may also be explored to fund NIL ventures.
Although we would like to hear from you, we cannot represent you until we know that doing so will not create a conflict of interest. Also, we cannot treat unsolicited information as confidential. Accordingly, please do not send us any information about any matter that may involve you until you receive a written statement from us that we represent you (an ‘engagement letter’).
By clicking the ‘ACCEPT’ button, you agree that we may review any information you transmit to us. You recognize that our review of your information, even if you submitted it in a good faith effort to retain us, and, further, even if you consider it confidential, does not preclude us from representing another client directly adverse to you, even in a matter where that information could and will be used against you. Please click the ‘ACCEPT’ button if you understand and accept the foregoing statement and wish to proceed.