More than one year after the Supreme Court’s 9-0 decision in National Collegiate Athletic Association v. Alston that the NCAA is not exempt from the Sherman Act with respect to certain compensation rules, the floodgates have opened for student-athletes to profit from their name, image, and likeness (“NIL”). However, the Court’s majority opinion in Alston did not cover the NCAA’s rules governing NIL deals in college athletics—it only covered compensation rules regarding education-related benefits provided directly to student-athletes by member schools. Allowing NIL deals was instead a direct result of changing public opinion about compensation in college sports and changes in state law, and an indirect result of Alston. The 9-0 opinion was perhaps a signal that the only thing America agrees on is that the NCAA does not fairly compensate athletes.
Despite the narrowness of Alston’s holding, NIL deals had their moment in Justice Kavanaugh’s concurrence, which was an absolute censure of the NCAA’s compensation rules, including endorsement deals (i.e., NIL deals). Just as “[l]aw firms cannot conspire to cabin lawyers’ salaries in the name of providing legal services out of a ‘love of the law,’” the NCAA cannot price-fix labor by defining the product of college sports as amateurism. If the NCAA had any remaining thought that some of its other compensation rules would be easily exempt from the purview of the Sherman Act if later challenged, Kavanaugh’s concurrence was a resounding “no.”
On June 30, 2021, only eight days after the decision in Alston, the NCAA announced that all three divisions had adopted interim rules suspending its previous NIL rules. The interim policy provided four new rules. First, college athletes are allowed to “engage in NIL activities that are consistent with the law of the state where [their] school is located.” Second, if an athlete’s school is located in a state with no NIL law, then he or she can engage in NIL activities “without violating NCAA rules related to name, image and likeness.” Third, athletes “can use a professional services provider, [like an agent,] for NIL activities.” Fourth, athletes must report NIL activities to their schools.
Following this announcement, states quickly moved to pass laws allowing college athletes to receive compensation. For example, Roy Cooper, Governor of The Center of the College Basketball Universe and the state that is home to the greatest college basketball program in history (i.e., the University of North Carolina at Chapel Hill), issued an executive order allowing NIL deals two days after the NCAA announced its interim policy.
Contrary to the NCAA’s arguments against paying college athletes, the product of college sports has remained essentially the same since the adoption of the interim policy—16.3 million people watched UNC beat Duke to end Coach K’s career in the Final Four without a care in the world that the game likely featured some of the most highly compensated athletes in college sports.
However, the NCAA’s original concern—that NIL deals are used to indirectly induce athletes to attend certain schools—remains, and several other concerns have emerged since the NCAA adopted interim rules. New concerns include college athletes’ potential liability under tax law and federal securities laws and regulations due to a general lack of knowledge about how these laws impact them.
Federal Income Tax Liability
Over the last year, college athletes have learned that “in this world nothing can be said to be certain, except death and taxes.” College athletes’ federal income taxes are complicated by a number of issues. First, they file a Form 1040 income tax return as independent contractors after receiving a Form 1099-NEC (i.e., non-employee compensation) or some other variation of a Form 1099 from companies with whom they have entered into NIL deals. This requires them to aggregate all 1099s they have received throughout the year when filing their tax return. In comparison, “traditional workers” in the United States file their Form 1040 after receiving a Form W-2 that includes their salary and wages for the year.
Second, college athletes could unintentionally underreport gross income due to the intricacies of the Internal Revenue Code (“IRC”) and related Treasury Regulations. Section 61(a)(1) of the IRC provides that gross income specifically includes “compensation for services, including fees, commissions, fringe benefits, and similar items.” Compensation includes both cash and non-cash compensation, such as cars provided by dealerships or products from companies. If college athletes receive non-cash compensation, then they must include in their income as compensation the fair market value of the property taken in payment. Thus, if they receive something like a car in exchange for use of their NIL, they have gross income in the amount of the fair market value of the car (or fair market rental value, if the car is leased). Further, college athletes’ receipt of payment in the form of cryptocurrency further complicates computation of gross income for federal income taxes.
Liability Under Federal Securities Laws
NIL deals for endorsing a cryptocurrency may expose college athletes to federal securities laws if the cryptocurrency is a “security” under the Securities Act of 1933. A security is broadly defined under the Securities Act to encompass many different types of instruments, including investment contracts. Whether an instrument is an investment contract for purposes of the Securities Act depends on a fact-specific analysis under the Howey test. In Howey, the Court held that investment contract means “a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”
If a college athlete promotes a cryptocurrency that is a security under the Howey test, then he or she is subject to federal securities laws, including anti-touting provisions. Under Section 17(b) of the Securities Act, it is unlawful for any person to “publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer a security for sale, describes such security for a consideration received, directly or indirectly from an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof.”
Thus, a college athlete promoting a cryptocurrency that is a security “must disclose the nature, scope, and amount of compensation received in exchange for the promotion.” Further concerns for potential liability under federal securities laws arise from “violations of the anti-fraud provisions of the federal securities laws, [as well as] from participating in an unregistered offer and sale of securities.”
Possible Future NIL Regulations
Since the NCAA adopted its interim policy allowing compensation from NIL deals, it has not issued many regulations or clarifications on possible sources of income or potential issues for athletes. However, we will likely see more regulations come to fruition in the future. The past year has shown that it is necessary for schools to educate athletes on liability issues and encourage them to seek guidance from agents or other professionals with knowledge of the significant implications that arise from endorsement deals.
 See e.g., Max Escarpio, College Football’s Most Unique NIL Deals in 2022, Bleacher Report, https://bleacherreport.com/articles/10045014-college-footballs-most-unique-nil-deals-in-2022 (last visited Oct. 17, 2022); College Basketball NIL Rankings, On3NIL, https://www.on3.com/nil/rankings/player/college/basketball/ (last visited Oct. 17, 2022); Sarah Eberspacher et al., National Collegiate Athletic Association v. Alston, JD Supra (June 22, 2021), https://www.jdsupra.com/legalnews/national-collegiate-athletic-8794641/.
 Nat’l Collegiate Athletic Ass’n v. Alston, 141 S. Ct. 2141, 2166 (2021) (Kavanaugh, J., concurring).
 Alex Silverman, From Name, Image and Likeness to Pay for Play, Americans Increasingly Support Compensation for College Athletes, Morning Consult (June 29, 2021 4:07 PM), https://morningconsult.com/2021/06/29/nil-college-athletes-compensation/.
 Alston, 141 S. Ct. at 2166–2167.
 Id. at 2167.
 Michelle Brutlag Hosick, NCAA adopts interim name, image and likeness policy, Nat’l Collegiate Athletic Ass’n (June 30, 2021, 4:20 PM), https://www.ncaa.org/news/2021/6/30/ncaa-adopts-interim-name-image-and-likeness-policy.aspx.
 N.C. Exec. Order No. 223 (July 2, 2021).
 Duke vs. North Carolina is most-watched NCAA DI men’s national semifinal game since 2017, National Collegiate Athletic Association (April 3, 2022), https://www.ncaa.com/news/basketball-men/article/2022-04-03/duke-vs-north-carolina-most-watched-ncaa-di-mens-national-semifinal-game2017#:~:text=The%20UNC%2FDuke%20game%20delivered,of%2Dhome%20viewership%20is%20included.
 Pat Forde (@ByPatForde), Twitter, (Aug. 18, 2022, 3:02 PM), https://twitter.com/bypatforde/status/1560341306811064320.
 Ron L. Brown, Tax Implications When NCAA Student Athletes Make Money, Kiplinger (July 21, 2022), https://www.kiplinger.com/taxes/604955/tax-implications-when-ncaa-student-athletes-make-money#:~:text=Those%20with%20NIL%20deals%20or,employed%20Internal%20Revenue%20Service%20guidelines.
 See e.g., Kristi Dosh, FSU Softball Lands NIL Deal With Cryptocurrency Exchange FTX, Forbes (Dec. 21, 2021, 1:21 PM), https://www.forbes.com/sites/kristidosh/2021/12/29/fsu-softball-lands-nil-deal-with-cryptocurrency-exchange-ftx/?sh=e8c8a927c882; Ross Dellenger, Florida State Football Team Scores NIL Cash Deal From Crypto Company, Sports Illustrated (Aug. 17, 2021), https://www.si.com/college/2021/08/17/florida-state-football-team-nil-deal.
 Letter from Benjamin Franklin to Jean-Baptiste Le Roy (November 13, 1789).
 Tim Shaw, The Long Read: Tax Implications of College Collectives, NIL Deals, Thomson Reuters (October 6, 2022), https://tax.thomsonreuters.com/news/the-long-read-tax-implications-of-college-collectives-nil-deals/#:~:text=By%20January%2031%20in%20the,such%20as%20Venmo%20or%20PayPal.
 See supra note 17.
 26 I.R.C. § 61(a)(1).
 26 C.F.R. § 1.61–2(d)(1).
 15 U.S.C. § 77b(a)(1).
 SEC v. W.J. Howey Co., 328 U.S. 293, 298–99 (1946).
 SEC Division of Enforcement & SEC Office of Compliance Inspections and Examinations, SEC Statement Urging Caution Around Celebrity Backed ICOs (Nov. 1, 2017), https://www.sec.gov/news/public-statement/statement-potentially-unlawful-promotion-icos.
 15 U.S.C § 77(b).
 See supra note 31.
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