Don't Mess With Taxes

Students settling in at the top of Kyle Field stadium in College Station in advance of a Texas A&M vs. University of Texas-Austin game. The Lone Star State rivalry looks to resume, since Texas will join A&M in the Southeastern Conference (SEC) next year. (Photo by Zabdiel Gonzalez on Unsplash)

Yes, college football technically kicked off last weekend, but today was when most fans got the games they've been waiting months to see.

Like the TCU-Colorado match-up in the yet again rejiggered Big 12 conference. That game was wild!

Big time college games and money: The Horned Frogs' and Buffaloes' free-wheeling offenses underscored the excitement of college sports, especially National Collegiate Athletic Association (NCAA) Division I football and basketball games.

Those two programs are also big money makers, helped in part by their tax-exempt status.

"The money at stake is staggering," wrote Scott Hodge, President Emeritus and Senior Policy Advisor at the Tax Foundation, in a recent post at the tax policy group's blog.

Hodge points to the post's accompanying table, which cites 2021 Internal Revenue Service tax returns showing that the "Power Five" athletic conferences — the Big 12, Big 10, Atlantic Coast Conference (ACC), Pac-12, and Southeastern Conference (SEC) — reported nearly $3.3 billion in untaxed "program service revenue."

That, writes Hodge, is a catch-all category that includes income from broadcast rights, ticket sales, bowl games, and merchandise licensing.

In addition, he notes that although the conferences are 501(c)(3) charitable organizations, just 1 percent of their overall revenues comes from donations or grants.

"Of the five conferences, only the Pac-12 reported any taxable unrelated business income," according to Hodge. Unrelated business income tax, or UBIT in the acronym heavy tax world, applies to money that is unrelated to the main mission of the organization.

Expanded tax-free curricula: So sports are part of universities' main mission? It would seem so.

And that designation, notes Hodge, means that "99 percent of the $3.3 billion in total income generated by the [athletic] conferences is from sources that would be taxable if they were considered commercial enterprises."

Hodge's Tax Foundation post The Big Business of Tax-Free College Sports has more on college athletic programs' money, the seemingly inequitable tax treatment of it, and suggestions for changes.

Since the post is this weekend's Saturday Shout Out item, I'll let you read it. After your team's game is over, of course.

You also might find these items of interest:

• College financial aid via FAFSA is getting some tweaks
• Nonprofits' tax status reviews sometimes aided by public tips
• Navy vs. Notre Dame kicks off college football season 2023 and the associated sports betting
• Professional sports league tax-exempt status questioned again thanks to proposed pro golf merger

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