NIL 501(c)(3) Collectives Beware: The IRS Is Watching

The world of name, image, and likeness (NIL) continues to change with forces beyond federal law, state law, or NCAA bylaws: enter the IRS. The Office of the Internal Revenue Service's Chief Counsel has announced, citing numerous supporting revenue rulings and tax cases, in a non-precedent setting memo that non-profit NIL collectives are not tax exempt because they fail to satisfy IRS regulations, which require such benefits that any student-athlete receives from a non-profit collective to be indirect and incidental, both qualitatively and quantitatively, from any private interest or purpose. The memo calls into question the deductibility status of contributions made by donors to such collectives.