Overview
On July 11, 2023, Law360 quoted partner Elinor Ramey in an article titled, "IRS Memo May Deter Athlete NIL Orgs From Going Nonprofit." The article discusses how Organizations paying college athletes for use of their brand may be less likely to seek tax-exempt status, following the release of an IRS memo. The memo says organizations creating paid opportunities for college athletes to use their NILs don't qualify for tax-exempt status. When an organization serves both public and private interests, the private benefit provided must be qualitatively and quantitatively incidental to the main public interest.
Ramey noted that she's uncertain whether the goals of collectives and the athletes are compatible with what the memo provides. She says "I expect collectives to look at the various alternative for-profit structures versus trying to fit within the parameters for exemption…Any NIL collective should look at what it is doing, how that fits with the issues addressed in the memo, and then consider the options for changing its activities and structure."
Read the article at Law360.