Witnesses urge mandatory withholding, retirement accounts and financial education to protect college athletes from NIL tax traps

At a House Ways and Means hearing, three witnesses described the rapid expansion of name, image and likeness (NIL) income for college athletes and how the tax code and enforcement practices lag behind that growth. Several witnesses urged congressional action to prevent young athletes from accumulating large tax liabilities they cannot pay.

Sam Macho, a former NFL linebacker and ESPN analyst, described athletes who received large NIL checks without understanding the tax consequences. He said a freshman who earned $750,000 showed $6,000 later and had not made estimated tax payments, and he recounted a separate case of a freshman who received $100,000 and later died amid payment disputes. "We need to help these kids understand that we really care about them," Macho said, urging Congress to consider mandatory withholding that would direct a fixed share of NIL pay into a protected investable account for taxes and retirement.

Thad Madden, a former IRS revenue officer now advising on NIL, said athletes are typically treated as self-employed independent contractors and must pay self-employment tax with no withholding, a structure that produces compliance problems. Madden referenced IRS tax rules (including how lottery winnings are withheld under Code section 3402) to argue that a mandatory withholding regime—paired with accessible education—would raise compliance and reduce future delinquencies.

Robert Raola, a CPA in sports and entertainment accounting, outlined common tax workarounds and planning tools (SEP IRAs, business expense deductions, and agent fees) but underscored the complexity of multi-state filings triggered by "jock taxes." He said universities, collectives, and vendors sometimes treat noncash benefits (cars, housing, travel) as taxable compensation, which can create cash-flow problems when athletes owe tax on items they cannot readily convert to cash.

Committee members asked whether mandatory withholding, a dedicated NIL retirement or withholding account, or a flat federal withholding rate would be administrable. Witnesses generally supported options that combined withholding with automatic contributions to accounts that could be invested and that would be eligible for rollover into IRAs after college. Several members signaled bipartisan interest in drafting statutory models for withholding and education requirements, and asked the IRS for clearer guidance on classifying collectives and reporting noncash NIL compensation.

No formal vote or legislation was produced at the hearing, but lawmakers left with a set of concrete options to study further: mandatory withholding or automatic estimated payments, creation of tax-advantaged NIL savings accounts, mandatory financial-literacy programs at the institutional level, and more explicit IRS guidance on collectives and multi-state taxation.