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Name, Image, & Likeness: Three words that will end ameturism under the NCAA


On June 30, 2021, the National Collegiate Athletic Association (NCAA) released a statement allowing college athletes to profit on their name, image, and likeness (NIL) for all incoming and current student-athletes. The NCAA’s decision was a direct result of several states across the country passing their own legislation and the Supreme Court’s ruling just nine days earlier rejecting the NCAA’s argument that it should receive special antitrust treatment because of its academic mission.

The NCAA’s policy provides the following guidance to college athletes, recruits, their families and member schools:

  1. Individuals can engage in NIL activities that are consistent with the law of the state where the school is located. Colleges and universities may be a resource for state law questions.

  2. College athletes who attend a school in a state without an NIL law can engage in this type of activity without violating NCAA rules relating to name, image, and likeness.

  3. Individuals can use a professional services provider for NIL activities.

  4. Student-athletes should report NIL activities consistent with state law or school and conference requirements to their school.

Although the NCAA statement provides guidance to student athletes, it also raises many questions for which there is little guidance and a lot of uncertainty.

How will this additional revenue be categorized and why is this important?

Determining the nature of this income helps determine how it will be taxed. For instance, are the payments received by a student-athlete considered personal service income or endorsement income? Although the difference may seem inconsequential, the tax consequences are not. In addition, how an agreement is structured may determine the nature of the income and, ultimately, its tax treatment.

Endorsement agreements allow the sponsor to use the athlete’s name, image, and likeness to advertise and promote the sponsor’s products for a specified period of time. Endorsements are not normally considered personal services, and thus these payments are not considered wages. Therefore, individuals who receive endorsement income – solely for the use of their name, image, or likeness – are subject only to federal and state income tax, not self-employment tax. In addition, endorsement income is fully allocated to the student athlete’s home state.

Endorsement income that is tied to performance of a service, however, is considered personal service income and is subject not only to federal and state income tax, but also self-employment tax. This is illustrated in the US Tax Court’s case involving Retief Goosen, a professional golfer who won the US Open in 2001 and again in 2004. The court determined that “[i]ncome from the use of his name and likeness depended on whether he played in a specified number of golf tournaments. In other words, petitioner’s participation in a golf tournament was material to receiving income for the use of his name and likeness.” Because the endorsement income was tied to his performance, it was subject to both income and self-employment taxes. In addition, like other personal service income, it is allocated to all jurisdictions in which the services were performed. Therefore, an athlete who signs an endorsement contract based on the number of football games they play, will be taxed in every state in which they play those games.

How and where will this income be taxed?

Endorsement income that is not tied to performance or services will be subject to federal and state income tax rules based on the athlete’s residence. Therefore, if the athlete is:

  1. Not a resident of the US, this income is not subject to tax at either the federal or state level.

  2. A resident of the US and a resident of a state with no income tax, this income is taxed at only the federal level.

  3. A resident of the US and a resident of a state with income tax, this income will be taxed at both the federal and state level (in their state of residence).

Endorsement income that is tied to a performance or a service is considered personal service income and must be allocated to all jurisdictions in which the athlete’s services were performed. In addition, this income will be subjected to self-employment tax at the federal level.

Case Study: Endorsement Income

The following example illustrates how income (three levels starting at $10,000) from an athlete’s name, image, and likeness could be interpreted and the corresponding tax consequences.

A student athlete, assumed to be claimed as a dependent, attending the University of Washington plays football and receives endorsement income that is not tied to any services. This compensation is reported on a 1099-MISC/NEC and will be reported on the athlete’s federal tax return and taxed at the applicable federal rate. Since there is no state tax in Washington, there will be no state tax consequences.

Table 1A

In contrast, a football player who attends the University of Southern California (USC) will pay California state tax, which is an additional $106,734 at the $1,000,000 “Endorsement Income” scenario.

Table 1B

As the two tables above indicate, the result is that a University of Washington football player’s net income (gross income minus tax paid) is $106,734 greater than that of the same scenario for a USC football player because the Washington player is subject to no state tax.

Case Study: Personal Service Income

In our second example, the income for the use of their name, image and likeness is tied to either a service such as a social media post or their performance as a student athlete and is considered personal services.

Therefore, an athlete attending the University of Washington who receives endorsement income tied to each game they play will again be issued a 1099-MISC/NEC statement. In this situation the income is considered self-employment income and is reported on a Schedule C on their federal tax return.

Since the income is for personal services, it will not only be subjected to self-employment tax, but the income needs to be allocated in all jurisdictions in which it is earned. In the case of a University of Washington football player this income is allocated into each state that they play. This upcoming fall, the University of Washington, other than those games they play in state, also play two games in California and one game each in Arizona and Oregon. Below is a look at the taxes the player could face when considering their away game schedule.

Table 2A

The result is that the additional self-employment and non-resident state tax lowers their net income by $74,671 in our highest scenario.

In contrast, a football player at USC who also incurs additional self-employment tax lowers their net income by $42,800 as the allocation of income into other states doesn’t increase their tax liability. Since California provides tax credits for taxes paid to other states the additional non-resident tax offsets the player’s resident tax.

Table 2B

The result is that with the additional self-employment and non-resident tax, the difference narrows between players from the two universities with a football player from California still paying more in overall tax.


The ability for student athletes to profit from their name, image and likeness has drastically changed the landscape of college athletics. Throughout all this the IRS has remained quiet and with this change has come little guidance for athletes and their advisors. Having a good tax advisor that is familiar with the different forms of compensation and both international and state taxation is nearly as important as those who are securing these deals for the athletes. Because with income comes tax liability, and without proper guidance significant tax liabilities can catch these athletes by surprise.


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