Northwestern University football players can unionize

Deacon923 said:

From the IRS:



http://www.irs.gov/publications/p970/ch01.html#en_US_2013_publink1000177987

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It does not represent payment for teaching, research, or other services required as a condition for receiving the scholarship.

Would seem to be the key part from that. If my interpretation is correct that the NLRB ruled that football is a service required as a condition of receiving the scholarship and since they are viewed as employees then that would be considered taxable. I'm no tax expert, but that's what I get out of this.

I agree.

This ruling will be overturned. The players that brought this suit are idiotic. Yes, the NCAA needs significant reform. Unfortunately players and lawyers want part of the NCAA pie and labor unions want to expand whenever they can.

In return for being employees, players now get to pay taxes on their full scholarships and any benefits that they receive. Their Nike or under armour shirts/shoes now are compensation as well. Oh yeah, enjoy paying union dues.

Here's another fun little tax implication.

A player at Big State U – say the University of Texas - has to pay tax on tuition of under $5,000. The player would qualify for the Earned Income Tax Credit and get money back every April. They’d get more back if they had a child.

A player at Northwestern or Wake Forest, tuition $60,000+, would be in the 25% tax bracket and would have basically no deductions, so they’d be forking over $15,000 every April. Where are they going to get the cash? Is the NCAA going to let the colleges pay it or loan it to the players? I don't think so.

If what I just said is true, and I think it is, how in the hell do the privates recruit players?

Deacon923 said:

Here's another fun little tax implication.

A player at Big State U – say the University of Texas - has to pay tax on tuition of under $5,000. The player would qualify for the Earned Income Tax Credit and get money back every April. They’d get more back if they had a child.

A player at Northwestern or Wake Forest, tuition $60,000+, would be in the 25% tax bracket and would have basically no deductions, so they’d be forking over $15,000 every April. Where are they going to get the cash? Is the NCAA going to let the colleges pay it or loan it to the players? I don't think so.

If what I just said is true, and I think it is, how in the hell do the privates recruit players?

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Was thinking the same. That would pretty much eliminate scholarship athletes at private schools and possibly out-of-state scholarships at public universities. How they calculate benefits could be an issue for the public school athletes as well, however. If you go back to the USA Today article where they calculated the cost per football player in FBS, most of the schools (particularly the SEC) were well north of $100k per player.

reaction from ACC ADs: http://espn.go.com/blog/ncfnation/post/_/id/94306/acc-ads-leery-of-player-unionization

Deacon923 said:

Here's another fun little tax implication.

A player at Big State U – say the University of Texas - has to pay tax on tuition of under $5,000. The player would qualify for the Earned Income Tax Credit and get money back every April. They’d get more back if they had a child.

A player at Northwestern or Wake Forest, tuition $60,000+, would be in the 25% tax bracket and would have basically no deductions, so they’d be forking over $15,000 every April. Where are they going to get the cash? Is the NCAA going to let the colleges pay it or loan it to the players? I don't think so.

If what I just said is true, and I think it is, how in the hell do the privates recruit players?

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Apparently if they keep the terminology for the scholarship as a "Grant-In-Aid", it won't be taxable. But this will be the crux of the negotiations.

But "Grant in Aid" changes because they were deemed to be employees. They are being compensated for their labor. When will the first player file a worker's comp claim? When will OSHA investigate a work place injury? This could spin out of control, and whom ever said that this is the beginning of the end of college football might be on to something.

BBDeac said:

Was thinking the same. That would pretty much eliminate scholarship athletes at private schools and possibly out-of-state scholarships at public universities. How they calculate benefits could be an issue for the public school athletes as well, however. If you go back to the USA Today article where they calculated the cost per football player in FBS, most of the schools (particularly the SEC) were well north of $100k per player.

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You can't tax a kid for football buildings and personnel.

Deacon923 said:

reaction from ACC ADs: http://espn.go.com/blog/ncfnation/post/_/id/94306/acc-ads-leery-of-player-unionization

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Florida State AD Stan Wilcox said, “I don’t think student-athletes really want to go down that road,” he said. “You become an at-will employee that can be hired and fired at any time. Your argument is that it gets you benefits, but you kind of have that now. If you become an employee, every employee has to pay X amount of dollars into a health care program. I don’t know if they’ve thought the whole thing through, as to what it really means to be an employee of the university.”

Hell no they haven't thought the whole thing through. When I was that age I hadn't thought a lot of things through. I am lucky to have survived. These kids don't have any concept of what being an employee means. It would serve them right if they get what they ask for.

And when that happens I will stop watching college athletics. :squint:

If the NCAA and the professional leagues would stop colluding to keep the athletes in college for a required number of years then this isn't a problem anymore.

RJKarl said:

Apparently if they keep the terminology for the scholarship as a "Grant-In-Aid", it won't be taxable. But this will be the crux of the negotiations.

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I'd like to see a link to support this assertion. In my experience as an actual tax lawyer (#humblebrag) the IRS doesn't care what you call something*. You can't call a paycheck a gift and avoid employment taxes. You can't call an employee an independent contractor and hope those magic words will make the FICA tax go away.

If in fact an agency of the Federal government determines that x group of people are employed by a university, and the foundation of this finding is that their "grants in aid" are actually compensation for services rendered, it's going to be hard to convince the IRS to look the other way just because they call it a "grant in aid".

All that said, the IRS has a conscience, or at least a desire to avoid really bad publicity, so I could see the agency being very slow to start tagging 19 year old reserve linebackers with big tax bills. They will probably slow-walk it in hopes that Congress would pass a specific exemption applicable to student-athletes. There would be a lot of pressure on Congress to do so.


*There are a few places in the code where magic words actually do change the tax result. See, e.g. Section 736.

My GF is paying tax on her full ride to UF because part it covered more than just tuition and books. Anything used for housing and living expenses is taxable.

Deacondoc said:

This ruling will be overturned. The players that brought this suit are idiotic. Yes, the NCAA needs significant reform. Unfortunately players and lawyers want part of the NCAA pie and labor unions want to expand whenever they can.

In return for being employees, players now get to pay taxes on their full scholarships and any benefits that they receive. Their Nike or under armour shirts/shoes now are compensation as well. Oh yeah, enjoy paying union dues.

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The problem is reform isn't happening. Though I don't think the union will be the end game, it seems to be a necessary step. The schools/NCAA are not taking reforms seriously. Maybe the athletes can at least get a seat at the table.

CDeacMan said:

If the NCAA and the professional leagues would stop colluding to keep the athletes in college for a required number of years then this isn't a problem anymore.

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No. That affects like .001% of NCAA athletes.

DeaconCav06 said:

My GF is paying tax on her full ride to UF because part it covered more than just tuition and books. Anything used for housing and living expenses is taxable.

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I know this is right, but I would be curious as to the % of people that actually report the income. To my knowledge there is no requirement that schools provide 1099s, w-2s, or the like, to the student or the IRS, so it would just be self-reported. I highly doubt many of our athletes (or students with full rides for academic or other reasons) are reporting $13,000 (or so) of income for the room, board, and other expenses above and beyond tuition, fees, and books.

Wakelaw2006 said:

I know this is right, but I would be curious as to the % of people that actually report the income. To my knowledge there is no requirement that schools provide 1099s, w-2s, or the like, to the student or the IRS, so it would just be self-reported. I highly doubt many of our athletes (or students with full rides for academic or other reasons) are reporting $13,000 (or so) of income for the room, board, and other expenses above and beyond tuition, fees, and books.

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Her 1098-T lists "Scholarships or Grants" which exceeds the amount received for tuition and qualified expenses, and gives her like an extra 7K in income. The problem was that she also worked at Shands while in school on the weekends, and last year worked from May-December full time.