Protecting Student Athletes from Unexpected Tax Liability Act

(u) Extension of withholding to certain payments to student athletes classified as not employees

(1) In general. For purposes of this chapter and so much of subtitle F as relates to this chapter, any name, image, and likeness payment to a student athlete shall be treated as if it were a payment of wages by an employer to an employee.

(2) Amount withheld

(A) In general. The amount to be deducted and withheld under this chapter from any payment to which paragraph (1) applies shall be an amount equal to 30 percent of the amount of such payment.

(B) Non-cash remuneration. In the case of remuneration other than cash, the amount to be withheld under this chapter shall be an amount equal to 30 percent of the fair market value of such remuneration on the date of transfer from the payor to the payee.

(3) Name, image, and likeness payment. The term name, image, and likeness payment means remuneration to a student athlete in cash, property, or services for the commercial use of such student’s name, image, or likeness.

(4) Definitions. For purposes of this subsection—

(A) Student athlete. The term student athlete means an individual who is enrolled as a full-time student at an institution and who—

(i) makes satisfactory progress towards completing a degree, and

(ii) participates in intercollegiate athletic competition or competes for a varsity sports team as part of the institution’s educational, developmental, or extracurricular programs.

(B) Institution. The term institution has the meaning given the term institution of higher education under section 101 of the Higher Education Act of 1965.

(5) Worker classification. Withholding under this subsection shall not be taken into account in determining whether the payor or payee of a name, image and likeness payment is an employee or an employer for purposes of this title.

(6) Exception. A payee may elect to have paragraph (1) not apply, and such election shall remain in effect until the taxpayer terminates such election.

(7) Regulations. The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out this subsection.

(4) New student athletes. No addition to tax shall be imposed under subsection (a) with respect to any underpayment if the Secretary determines—

(A) that the taxpayer is a student athlete with respect to whom section 3402(u) applies for the taxable year, and

(B) that the addition to tax was not waived under this paragraph with respect to the taxpayer for any prior taxable year.