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12 Rutgers Bus. L.J. 1 (2015)

handle is hein.journals/rutgblaj12 and id is 1 raw text is: RUTGERS BUSINESS LAW REVIEW - 12 Rutgers Bus. L.J. 3 OMAR A. BAREENTTO NCAA, It's Time to Pay the Piper: The Aftermath of O'Bannon v. NCAA and Northwestern v. College Athletes Players Association ABSTRACT. The National College Athletic Association (NCAA) is a non-profit association that organizes and regulates the athletic programs of many colleges and universities throughout the United States. Prior to 2014, the NCAA endeavored to treat athletes as students rather than professionals or employees by restricting their sources of income to scholarships. O'Bannon v. NCAA and Northwestern v. College Athletes Players Association have completely destroyed the NCAA's mission to define athletes just as students. Now, student athletes, specifically on the Division 1 level, will be compensated beyond a scholarship and Football Bowl Series (FBS) scholarship football players have the ability to unionize. The focus of the debate by college sports enthusiasts has been on whether the NCAA should embrace a transformation into a professional league or should preserve its commitment to amateurism. This article focuses on how both decisions raise serious questions about the IRS's current treatment of athletic scholarships. Section 117 of the United States Tax Code excludes scholarships from gross income, so long as the amount received was not given in exchange for any service by the student. Former athletes, legal scholars, and journalists have long argued student athletes, specifically on the Division I level, have provided the NCAA athletic services and other rights in exchange for scholarships. Unfortunately, the IRS has paid no attention to the overt exchange and no court has ruled on whether athletic scholarships qualify for tax exclusions. Making matters worse, taxpayers do not have the legal means to rectify the situation. This article will explore why the Section 117 tax exclusion should have never applied to athletic scholarships before, and how with the recent change to the NCAA model, the exclusion could be even more inapplicable. This article will also provide the NCAA and the IRS with an alternative method of excluding athletic scholarships from taxation. The biggest obstacle preventing the NCAA from utilizing the alternative exclusion is that they will be forced to admit that student athletes are employees. AUTHOR. Omar Bareentto is a J.D. Candidate for May 2016, at Rutgers School of Law-Newark. Omar would like to thank his mother, Safura Katabay, for all the love and support that she has provided him. Omar also extends a special thanks to the Rutgers Business Law Review for their guidance and confidence in his note.

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