Washington, July 2 (SocialNews.XYZ) US lawmakers have called for reforms to protect college athletes from crippling tax bills as the explosive growth of Name, Image and Likeness (NIL) deals leaves many young sports stars struggling to navigate a complex tax system without adequate guidance.
During a House Ways and Means Committee hearing this week on the multibillion-dollar sports industry, lawmakers from both parties heard testimony that student athletes, many still in their teens, are earning hundreds of thousands of dollars through endorsement deals while often remaining unaware of their tax obligations.
Former NFL linebacker and ESPN analyst Sam Acho told lawmakers about an 18-year-old football player who earned USD 750,000 through NIL agreements, bought his mother a home, purchased a car and rented an apartment, only to discover he had about USD 6,000 left and faced a tax bill of roughly USD 320,000 because no taxes had been withheld.
"The tax code wasn't written for a 17-year-old college football player who's coming into sudden wealth," Acho said. He urged Congress to consider mandatory withholding from NIL payments and stronger financial education for student-athletes.
Former Internal Revenue Service official Thad Madden said college athletes receiving NIL income are treated as self-employed independent contractors rather than employees. As a result, they must pay federal income tax as well as Social Security and Medicare taxes without automatic withholding.
"That's quite the ask for an 18-year-old fresh out of high school," Madden told the committee.
He said many athletes are leaving college with large unpaid tax liabilities because they spend their earnings before setting aside money for taxes. Madden argued that mandatory withholding from NIL payments would help improve compliance and prevent young athletes from falling into debt with the IRS.
Several lawmakers from both parties expressed support for improving financial literacy among college athletes. Witnesses said many universities focus primarily on athletic performance rather than educating players about contracts, taxes and long-term financial planning.
Acho told lawmakers that "players need advocates, not fans", arguing that many athletes lack trusted advisers as they navigate contracts, taxes and investment decisions. He also urged Congress to encourage long-term savings by allowing athletes to build retirement accounts from a portion of their NIL earnings.
Lawmakers also examined the broader economics of the sports industry, including taxpayer-funded stadiums, tax-exempt municipal bonds and the tax treatment of professional sports franchises. Economists questioned whether billions of dollars in public subsidies for stadium construction deliver meaningful economic benefits to local communities.
Witnesses said foreign students on F-1 visas face additional complications because of immigration and tax rules, even as universities increasingly rely on international talent in collegiate sports.
The debate carries significance beyond the United States. American universities continue to attract growing numbers of international student athletes, including those from India, many of whom compete in NCAA programmes while pursuing higher education.
As NIL opportunities expand, Indian athletes studying in the US could increasingly encounter the same tax and financial planning challenges discussed by lawmakers.
Source: IANS
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