NiL Shift : IRS, NCAA & TILE IX

College basketball is at a turning point in the NIL (Name, Image, and Likeness) era, and the landscape is shifting rapidly. Here’s where things stand:

1. IRS Crackdown on NIL Collectives

The IRS ruling declared that NIL collectives, which are funneling money to athletes without a clear, legitimate exchange of non basketball services, cannot claim tax-exempt status. This means that the common model of a donor giving money to a collective—knowing it will go directly to athletes to play basketball—- doesn’t qualify as a charitable donation.

Despite this, many collectives have largely ignored the ruling, seemingly betting that enforcement will be weak or that the regulatory framework will change before they face real consequences. This collective noncompliance is based on the assumption that the IRS lacks the bandwidth to go after them aggressively. However, if the IRS does crack down, we could see collectives facing back taxes and penalties, forcing a shift in how NIL funds are structured.

2. NCAA’s Pivot: Schools Directly Paying Athletes

Starting in 2025, the NCAA has reportedly greenlit schools themselves to pay players directly, either as W-2 employees or 1099 independent contractors. This is a seismic shift, as it effectively professionalizes college athletics. If players are treated as W-2 employees, schools will have to navigate payroll taxes, workers’ compensation, and collective bargaining. If players are classified as 1099 independent contractors, they may be responsible for their own taxes, benefits, and liabilities.

This model formalizes something that has been happening informally—pay-for-play disguised as NIL. Now, instead of money flowing through collectives under the guise of marketing deals, schools can legally compensate athletes for their participation.

3. Title IX Implications: A Major Legal Challenge

The justification for why NIL payments didn’t violate Title IX (which mandates gender equity in educational institutions) was that these payments were for an athlete’s individual marketability, not their participation in a school-sponsored program. Since the money came from outside collectives rather than schools, Title IX didn’t apply.

But now, with schools paying players directly, Title IX becomes a much bigger issue. If men’s basketball and football players are receiving massive direct payments while female athletes are not getting equivalent compensation, schools will almost certainly face legal challenges. This could lead to:
• Equal pay mandates across men’s and women’s sports.
• Revenue-sharing models that account for gender equity.
• Lawsuits from female athletes if compensation is heavily skewed toward male-dominated sports.

What Happens Next?
• The IRS could begin enforcement against noncompliant collectives, forcing a move toward more structured and legally sound NIL deals.
• Schools will need to create employment models for athletes, raising legal and financial complexities.
• Title IX lawsuits are inevitable, likely shaping the compensation structure for male and female athletes.
• A potential federal framework could emerge, but is unlikely, as Congress has shown little interest in regulating college athlete compensation.

The bottom line: the Wild West era of NIL is continuing. What started as a workaround to avoid outright paying players is now morphing into a system where direct payment is the norm—bringing a host of new legal and financial challenges that schools, conferences, and the NCAA must address in real time.
Stay Tuned .

Bring this back to the top in about a week when the tournament is over and when the dust from the meteor that is Pitino has settled. Metaphorically speaking, the crew behind the curtain is going to be forced into overdrive.

Will the NCAA address any of this at their summer meetings?? Probably. Will they address it as pointedly as they need to?? Almost assuredly not.