For one thing, tuition money isn’t taxable, whether you’re a school employee or not.
New Florida head coach Dan Mullen, whose contract runs for six years at $36 million a year, shared a few thoughts on whether college athletes should see their compensation increased:
They get a full scholarship to come to the University of Florida. They’re on the team. They get cost of attendance; they get room, board, tuition, books, fees, and cost of attendance to come here.
So you get into massive tax code questions. Everybody wants to say we should pay the players, get into the legal side of it before you jump up and say let’s go pay the players. Get into the IRS tax code laws.
The amount of money you would have to pay them, if you pay them a certain amount they would have to get that much money and even more because of taxable benefit issues just to pay for the value of their scholarship.
“None of these guys could afford to pay the taxes,” Mullen also said of college athletes.
The taxes thing is a common argument in favor of the NCAA status quo.
But if you wade into the numbers, it works better as an argument for figuring things out before paying players, rather than for just never paying them.
Money that goes toward tuition, fees, books, and several other basics couldn’t be taxed, per the tax code, which also refers to a scholarship given to a university employee — hypothetically, an athlete being paid a salary — as a “qualified tuition reduction” and says it can’t be considered income.
Mullen’s right that schools suddenly paying players money without figuring it out first would raise complications.
After talking with a couple lawyers, it’s unclear exactly how much of what players can currently receive — lodging, for example — could be considered taxable. And there’s no way to know whether any tax laws would change in athletes’ favor or otherwise.
Then again, if players were to officially become employees, things like training, treatment, and equipment would likely be considered parts of their jobs, not “benefits.”
But the “massive questions” wouldn’t be quite as harrowing as they might seem, since the biggest chunk wouldn’t be taxed regardless.
Either way, one simpler potential solution than having universities pay players directly would be to allow players to cash in on the open market, as has long already been the case in non-NCAA amateur sports.
Mullen referred to the Olympic model as “tricky,” and sure, there’d be things to figure out there, too.
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