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IRS Says Donations Made to Nonprofit NIL Collectives Are Not Tax Exempt

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No surprise, it’s the IRS.
It will not affect my giving.

I just assume everything I earn will be taxed twice anyway, so if I catch a break here and there, fine.
 
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If your tax-deductible donation goes towards a nice locker room sauna or other amenity for athlete Johnny, or a coach's salary, the IRS is content, but if it gets Johnny a car and a watch, then it's somehow different? I'd love to see this go to court.
 
jkdood said:
If your tax-deductible donation goes towards a nice locker room sauna or other amenity for athlete Johnny, or a coach's salary, the IRS is content, but if it gets Johnny a car and a watch, then it's somehow different? I'd love to see this go to court.
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You are making a good point about what is an “educational” donation. But the challenge won‘t be whether NIL can be considered an educational donation, it’s not, but whether donations to the athletic department should also be excluded. IMO.
@TheOriginalCane ??
 
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Of course the IRS would take that hill.

Already have property taxes, sales tax, State Income Taxes (some states), marriage license fees, local school taxes, vehicle registration taxes, business registration and permit fees/taxes, waste management tax, cigarette taxes, court fees/taxes, dog tags/taxes, drivers license taxes, social security taxes, gift taxes, unemployment taxes, estate taxes, fishing license/taxes, garbage tax, gasoline tax, gun registration taxes (some states), highway toll taxes, hotel bed taxes, hunting license taxes, import taxes, airport taxes, individual health insurance taxes, inheritance taxes, insect control taxes, building inspection fees/taxes, water hookup fees/taxes, tire disposal taxes, battery disposal taxes, IRS penalty and interest fees/taxes on your taxes, Library card fees/taxes, liquor taxes, luxury taxes, Medicare taxes, parking fees/taxes, passport taxes, air transportation taxes, biodiesel taxes, recreational vehicle taxes, self-employment taxes, service charge taxes, sport stadium taxes, state park taxes, federal park taxes, tanning bed taxes, telephone excise taxes,

AND WE HAVE NOT YET MENTIONED FEDERAL INCOME TAXES.

I swear - our forefathers had more freedom under the freaking British!
 
AtlAtty said:
You are making a good point about what is an “educational” donation. But the challenge won‘t be whether NIL can be considered an educational donation, it’s not, but whether donations to the athletic department should also be excluded. IMO.
@TheOriginalCane ??
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Uh, yeah, you are completely correct. I realize we have a bunch of guys who think they can outsmart the IRS with their brilliant hypotheticals, but it doesn't work that way.

The organization is the key. Religions and universities are fine, regardless of whether some ****head pastor spends church donations on a private jet.

And, yes, the form and substance mean something. Collectives are simply transferring money to individuals to spend it how they choose. Even in the most opulent university/religion situation, the "private jet" is still owned by the organization, not the individuals involved.

And earmarked donations to any one branch of a university are fine, as long as there is a corresponding reduction for the value of anything received in exchange.
 
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TheOriginalCane said:
Uh, yeah, you are completely correct. I realize we have a bunch of guys who think they can outsmart the IRS with their brilliant hypotheticals, but it doesn't work that way.

The organization is the key. Religions and universities are fine, regardless of whether some ****head pastor spends church donations on a private jet.

And, yes, the form and substance mean something. Collectives are simply transferring money to individuals to spend it how they choose. Even in the most opulent university/religion situation, the "private jet" is still owned by the organization, not the individuals involved.

And earmarked donations to any one branch of a university are fine, as long as there is a corresponding reduction for the value of anything received in exchange.
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As to the last line; so if you donate $10,000 but receive “free” tickets worth $2000, the donation is reduced to $8000?
 
90scane said:
Only twice?!

Medicare
Ssn
Federal
State
Personal property County
Sales tax
Cap gains
gas tax

I’m sure I could name a few more.
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Man, don’t remind me :LOL:

My favorite is “payroll tax”….
In my state its about 12% (?), all in, of an employees salary.
That’s the big, fat, fock you the government hits employers with as a thank you for employing people.
 
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AtlAtty said:
You are making a good point about what is an “educational” donation. But the challenge won‘t be whether NIL can be considered an educational donation, it’s not, but whether donations to the athletic department should also be excluded. IMO.
@TheOriginalCane ??
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There are an few issues IMO. One is whether the group that NIL is seeking to help is a large enough and identifiable charitable class.

The second is, even assuming an entity separate from the larger University or Foundation, like the University of Georgia Athletic Association, this would be one small component of a broader organization’s activity and exempt purpose. If I had to guess that is why they are now trying to fold them into the foundation, athletic association, university, etc.

Another issue if it is a standalone entity is if you are pulling marketing deals for athletes, how is that different from competing with the for profit general marketplace.

rsa coral gables said:
why would anyone think that it is a tax-free charitable donation when it is not a charitable donation
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They may have gotten exemption before the IRS realized what was going on or was pushing them through while climbing out of their Covid backlog, or they may have been applied for under the 1023EZ. Or they were pending and just telling donors they will get it. Lots of possibilities there.
 
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wspcane said:
There are an few issues IMO. One is whether the group that NIL is seeking to help is a large enough and identifiable charitable class.

The second is, even assuming an entity separate from the larger University or Foundation, like the University of Georgia Athletic Association, this would be one small component of a broader organization’s activity and exempt purpose. If I had to guess that is why they are now trying to fold them into the foundation, athletic association, university, etc.

Another issue if it is a standalone entity is if you are pulling marketing deals for athletes, how is that different from competing with the for profit general marketplace.


They may have gotten exemption before the IRS realized what was going on or was pushing them through while climbing out of their Covid backlog, or they may have been applied for under the 1023EZ. Or they were pending and just telling donors they will get it. Lots of possibilities there. But the common theme is whoever advised them on the front end should have known better or just didn’t care, and if they are attorneys should be sanctioned at a minimum.
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That last paragraph is key.

After that whole debacle where the IRS initially denied 501 status for political advocacy groups, they are now "quick" to initially approve organizations and then come back later with a more detailed rejection when they have more information. And, to be fair, rejections after review are not very common.

I think that is what is happening with the IRS guidance. It's like "don't try us, we aren't putting up with this anymore".
 
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