Natalie A. Roberts, J.D., LL.M.
Natalie A. Roberts, J.D., LL.M.

Name, Image, and Likeness (“NIL”) Collectives, the Jock Tax, and Student Athletes

On June 21, 2021, the U.S. Supreme Court in NCAA v. Alston unanimously upheld the 9th Circuit Court ruling that student athletes can be compensated for use of their name, image, and likeness, typically referred to as NIL.[1] Examples of NIL include autographs, personal appearances and promotions, and modeling of sports or non-sports apparel.

Ten days after that decision was issued, the NCAA issued an interim policy regarding NIL, stating that student athletes may use professional service providers such as agents and attorneys for NIL activities, but that the student athletes should report such activities according to state law or school/conference rules. The NCAA policy further provided that student athletes may not receive payment or compensation to play their sports and that schools and other involved parties such as boosters and donors are not permitted to offer recruiting inducements, including NIL opportunities. On February 24, 2023, the NCAA penalized the University of Miami and its basketball coach for recruiting violations, in connection with the recruitment of twin sisters who played basketball in college. The coach had facilitated a donor’s contact with the players and their family.

Thirty-two states have passed NIL laws and, although they vary, the state laws commonly prohibit student athletes from endorsing certain activities, including alcohol, tobacco, marijuana, gambling, and adult entertainment.

NIL Collectives

Typically funded by well-known school alumni and supporters, NIL collectives raise revenue and use funds to create opportunities for student-athletes to leverage their NIL in exchange for compensation. NIL Collectives generally operate independently of the affiliated university or athletic program. Some such organizations have applied for, and received, recognition of tax exemption under Section 501(c)(3). Others have been established under existing 501(c)(3) organizations that support the affiliated athletic program or university. On May 23, 2023, the IRS Chief Counsel’s Office issued Chief Counsel Memorandum AM 2023-004,[2] warning that many NIL collective organizations provide private benefits not related to any tax-exempt purpose, either qualitatively or quantitatively, and are therefore not eligible for the 501(c)(3) exemption.


Jock Tax

Some states have a state-level income tax, and some cities impose income taxes as well. These governmental units can tax individuals who earn income while present in a state or city even though they are not residents of that state or city. Professional athletes have been an easy target for this type of taxation. Taxes imposed on these athletes are commonly referred to as the “Jock Tax.” The athletes are required to file state-level income tax returns in multiple states, some filing as many as twenty-five tax returns. Taxes can be imposed based on the number of games played in the location or based on the number of days the athletes were required to attend team activities in the non-resident state or city.

Implications for College Athletes

Obviously, student athletes must file income tax returns in taxing states where they reside, reporting the NIL compensation, typically as self-employment income (ordinary income). They will now be required to file income tax returns and estimated tax returns in states or cities not only where they reside, but also in the state where they attend college and in states where they conduct NIL appearances and other activities. For example, an athlete who is a resident of Minnesota, and attends a college in Massachusetts, may have to pay taxes in both of those states. And if the athlete makes NIL appearances in New York City, the athlete may have to file returns and pay income taxes in both New York State and New York City. The taxes are apportioned based on the portion of income earned in the taxing jurisdiction.

Action Steps

NIL collectives should examine IRS Memorandum AM 2023-004 to evaluate whether they are, in fact, qualified for tax-exempt status under the facts and circumstances test and the private benefit doctrine described in the Memorandum. The burden is upon NIL collective to prove the organization is entitled to the 501(c)(3) exemption.

Based on how professional athletes are being taxed, we can assume taxing jurisdictions will be examining the opportunity to tax student athletes. Athletes should keep records of appearances and activities in taxing jurisdictions. Prospective college athletes should, and probably will, consider whether they should attend college in taxing jurisdictions.


[2] (pdf download available)



Natalie A. Roberts, J.D., LL.M.

Natalie A. Roberts, J.D., LL.M.

Natalie Roberts is licensed to practice in both Florida and Minnesota. She is dedicated to providing honest, exceptional and deeply personalized legal counsel to her clients.

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