WASHINGTON — U.S. Senators Ben Cardin (D-Md.), a member of the Senate Finance Subcommittee on Taxation and Internal Revenue Service (IRS) Oversight, and John Thune (R-S.D.), ranking member of the Subcommittee on Taxation and IRS Oversight, Wednesday introduced the Athlete Opportunity and Taxpayer Integrity Act. This bipartisan legislation would prohibit individuals and organizations from using the charitable tax deduction for specific contributions that compensate college or incoming college athletes for the use of their name, image, and likeness (NIL).
“In this new NIL era, we want to ensure that the opportunities available for student athletes to benefit from their own name, image and likeness are protected,” said Senator Cardin. “We also have an obligation to protect taxpayer funds, which means that charitable deductions should be reserved for charitable activities. Purposefully blurring the line between private expenses and charitable contributions dilutes both these efforts.”
“College athletes have the ability to benefit from opportunities related to their own name, image, and likeness, but outside organizations and collectives should not be able to write contributions off their taxes that are used to compensate athletes,” said Senator Thune. “This common-sense legislation would prohibit these entities from inappropriately using NIL agreements to reduce their own tax obligations. These basic taxpayer guardrails would protect athletes, strengthen NIL, and uphold the responsible stewardship of taxpayer dollars.”
Since the recent adoption of the National Collegiate Athletic Association’s NIL rules, certain organizations have established models that facilitate payment to current and incoming college athletes while claiming 501(c)(3) charitable status, which make those specific contributions tax deductible. Such activity is inconsistent with the intended purpose of the charitable tax deduction, and it forces taxpayers to subsidize the potential recruitment of – or payment to – college athletes based on their NIL status.
The Athlete Opportunity and Taxpayer Integrity Act would apply to individuals, organizations, and “collectives” (organizations that pool financial resources and direct funds to athletes to profit from their NIL). Educational institutions would be exempt from the legislation.