IRS Addresses Whether NIL Collectives Further an Exempt Purpose

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Collectives that develop name, image, and likeness opportunities for collegiate student-athletes in many cases will not be furthering an exempt purpose under Sec. 501(c)(3), the IRS advised in an Office of Chief Counsel legal memorandum published late last month.

As reported Wednesday by the Journal of Accountancy, this could significantly affect the landscape of college NIL collectives. If the collective does not further a Sec. 501(c)(3) exempt purpose, it will not be a tax-exempt organization under Sec. 501(a), and donations to the collective will not be tax deductible to donors.

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