Northwestern Wildcat Players Attempt to Unionize

[StrangeSox]

Are scholarships taxable? Grad student scholarships are not.

[mr_genius]

Are scholarships taxable?

 

nope

[RockRaines]

nope

At the moment.

[StrangeSox]

So why would Congress want to rewrite the tax code to make scholarships taxable? Just to be vindictive?

[Soxbadger]

Congress likes money?

[StrangeSox]

They could rewrite the code to exempt scholarships (maybe even specifically athletic scholarships?) today if they wanted.

[Jake]

You'll be hard-pressed to find a respectable university that is for-profit

[Texsox]

If they are reclassified as employees, and that those scholarships and actually employee compensation, wouldn't that change the tax status? According to the IRS regulations education benefits over $5,250 per employee are taxable. I guess what complicates it is the employee is working for the educational institution. But if, for example, AAA Corp pays for an employee to attend Northwestern and the expenses exceed that threshold, the employee is taxed on the balance. Why should it be different if Northwestern is paying for an employee to attend college? A private corporation can't call it a scholarship and magically make it tax free.

[EvilMonkey]

If they are reclassified as employees, and that those scholarships and actually employee compensation, wouldn't that change the tax status? According to the IRS regulations education benefits over $5,250 per employee are taxable. I guess what complicates it is the employee is working for the educational institution. But if, for example, AAA Corp pays for an employee to attend Northwestern and the expenses exceed that threshold, the employee is taxed on the balance. Why should it be different if Northwestern is paying for an employee to attend college? A private corporation can't call it a scholarship and magically make it tax free.

And this happens whether they unionize or not. The classification has already happened, it isn't based on unionization or not. So all the future NW scholarship guys can now thank the guy for their huge tax bill about to come.

[StrangeSox]

except that scholarships are still not currently taxable

[Texsox]

except that scholarships are still not currently taxable

 

They stop being scholarships and become employee benefits. If McDonalds gives an employee $10,000 towards education as part of their employment, the amount over $5,250 is taxable as income. They can't rename it "scholarship" and make it tax free. There are also tax questions about housing. Employer provided housing is taxable as well.

[Texsox]

Since an IRS spokesman declined comment on the tax implications of college athletes unionizing, CBSSports.com reached out to a tax attorney, Ed Hannon of Freeborn and Peters LLP, for clarity.

 

Hannon cited Sec. 117 of the “Current Internal Revenue Code,” which essentially states that though a “qualified scholarship” is not considered gross income, that can change if the scholarship money “represents payment for teaching, research or other services by the student required as a condition for receiving the qualified scholarship or qualified tuition reduction.”

 

In other words, if an employee is doing a job unrelated to his major as a condition of getting the scholarship, “those dollars will likely be fully taxable,” Hannon said.

 

Hannon advised there are exceptions, such as when an employee does a job relevant to what he's studying.

 

You want to redefine pay-for-play? Try an offensive lineman/biology major getting taxed on $60,000 because his football work doesn't align with his major.

 

That's why Hannon wonders whether schools will create college football majors as a loophole for players – that's if they want to help. Or maybe, as Bylaw Blog author John Infante from athleticscholarships.net points out, a physical education or coaching major would suffice as a bargaining chip for tax-free status.

 

“The threshold question in addressing this is how do they get around that problem?” Hannon said. “You get the scholarship but you have to play football for us, and we're going to pay you X dollars to play football, that can cause all of tuition to become potentially taxable. If they are employees, they'd have to go by fringe benefit tax rules that can haunt every employer.”

 

This answers how these scholarships would be different than grad students. Grad students typically are teaching in their field of study.

[Jenksismyhero]

I wonder what weight is attributed to a regional judge for the NLRB on the question of employment at a university and how that changes IRS definitions. I'm sure a court will have to affirm the decision before it really means anything legally.

[Balta1701]

I wonder what weight is attributed to a regional judge for the NLRB on the question of employment at a university and how that changes IRS definitions. I'm sure a court will have to affirm the decision before it really means anything legally.

Not only that but it has to go through the full national NLRB as well for clarification IIRC.

[StrangeSox]

That is where it will go first, and then possibly on to court challenges.

[cabiness42]

http://www.cnn.com/2014/04/07/us/ncaa-bask....html?hpt=hp_t2

 

Maybe the union can get poor, undernourished Shabazz some food.

[StrangeSox]

”Revenues derived from college athletics is greater than the aggregate revenues of the NBA and the NHL,” said Marc Edelman, an associate professor at City University of New York who specializes in sports and antitrust law. He also noted that Alabama’s athletic revenues last year, which totaled $143 million, exceeded those of all 30 NHL teams and 25 of the 30 NBA teams.

 

Texas is the largest athletic department, earning more than $165 million last year in revenue — with $109 million coming from football, according to Education Department data. The university netted $27 million after expenses.

 

Other major programs such as Florida ($129 million), Ohio State ($123 million), Michigan ($122 million), Southern California ($97 million) and Oregon ($81 million) also are grossing massive dollars.

 

http://abcnews.go.com/Sports/wireStory/col...singlePage=true

[Soxbadger]

http://abcnews.go.com/Sports/wireStory/col...singlePage=true

 

Wow he noted that running a single sport is cheaper than running 20+ sports.

 

Lets compare apples and apples:

 

Basketball budgets: http://www.bbstate.com/info/teams-hoopsbudget

 

15 mil is top

 

That is not even 25% of the NBA salary cap, let alone stadium costs etc. If anything that argument somewhat hurts them, because it shows for the most part college athletics are subsidized. Unless we are going to go with the "40 hour rule" and then a guy on band is an employee too, because well 40 hours is 40 hours right?

 

It doesnt matter if its a CEO or janitor, 40 hours is 40 hours.

 

[Texsox]

So what's the ripple effect? Who will have money taken away from to pay players? Fewer scholarships? Cut non revenue sports? Will it kill athletics at smaller universities?

[southsider2k5]

So what's the ripple effect? Who will have money taken away from to pay players? Fewer scholarships? Cut non revenue sports? Will it kill athletics at smaller universities?

 

We have already seen a lot of male sports die at many schools because of Title IX. I have no doubt this would mean the death of football at a lot of programs if this were to happen.

[Jenksismyhero]

I wonder if Title IX would even apply if athletes became employees.

[Soxbadger]

So what's the ripple effect? Who will have money taken away from to pay players? Fewer scholarships? Cut non revenue sports? Will it kill athletics at smaller universities?

 

You have to imagine that the end result is non revenue sports being completely stripped to bare bones. How many of those kids are going to lose scholarships? I have to imagine most of them. No reason to give swimmer A a scholarship if he may turn around and want more compensation.

 

Unfortunately there is just no way to draw a line between basketball/football and other sports. If the ruling is based on the amount of hours/workload, it has no connection to revenue and therefore it really doesnt matter that the Qudditch team is making negative money, they are employees so now they have to be paid more than their scholarship.

 

There was a point in time when unions/etc did really great things. But now many of them are just a manifestation of a different type of greed.

 

No one even mentions that many of the "Northwestern Football Team" would not have been accepted into Northwestern if they weren't football players. How much value is there in getting a NU education versus a community college?

[southsider2k5]

You have to imagine that the end result is non revenue sports being completely stripped to bare bones. How many of those kids are going to lose scholarships? I have to imagine most of them. No reason to give swimmer A a scholarship if he may turn around and want more compensation.

 

Unfortunately there is just no way to draw a line between basketball/football and other sports. If the ruling is based on the amount of hours/workload, it has no connection to revenue and therefore it really doesnt matter that the Qudditch team is making negative money, they are employees so now they have to be paid more than their scholarship.

 

There was a point in time when unions/etc did really great things. But now many of them are just a manifestation of a different type of greed.

 

No one even mentions that many of the "Northwestern Football Team" would not have been accepted into Northwestern if they weren't football players. How much value is there in getting a NU education versus a community college?

 

Kain Colter already said he wouldn't be at NW without being able to QB.

[Soxbadger]

I mean (imo) that is ultimately a benefit that really cant be valued. These guys are getting huge opportunities, not just on the football field, but in my life. Being in a major program connects you to alumni etc and many times can get you started on a career/path you would have otherwise had no opportunity to have.

 

I may hate things like draft age limits etc, but Im just not sure they really are employees.

[Balta1701]

I mean (imo) that is ultimately a benefit that really cant be valued. These guys are getting huge opportunities, not just on the football field, but in my life. Being in a major program connects you to alumni etc and many times can get you started on a career/path you would have otherwise had no opportunity to have.

 

I may hate things like draft age limits etc, but Im just not sure they really are employees.

The problem with this entire scenario is that you can turn the language around...I'm just not sure they really are just amateurs...and be completely accurate in that statement.