The letter made a plea for donations and urged those receiving it to consider stepping up giving before the end of the year, through a new “Pay It Forward” program.

Sent earlier this month, the letter came from a nonprofit with a few traits that distinguish it from the soup kitchens, homeless shelters, and other charities trying to capitalize on the holiday season. This nonprofit is not quite cash poor — it raked in $150 million the previous year — several of its top employees make $1 million or more, and it’s about to be featured on a wildly successful television program that will generate hundreds of millions of dollars.

The nonprofit here is the University of Oklahoma’s athletics department, and the letter is one of several urgent notes going out this month to boosters of big college sports programs across the country grappling with impact of the tax overhaul. The legislation contains two measures that will squeeze college athletics departments: It eliminates the long-running — and much-criticized — deductions boosters have been able to take on donations tied to season tickets and imposes a tax on seven-figure salaries for employees of nonprofits.

“It’s going to have a huge impact,” said Tom McMillen, chief executive of Lead1 Association, which advocates for athletic directors at Football Bowl Subdivision schools. “I conservatively estimate it’s going to cost our schools in the hundreds of millions of dollars.”

The bill doesn’t go into effect until Jan. 1, however, creating a scramble at some schools to get boosters to donate as much as possible while they still can write off a chunk of the money. Oklahoma’s letter, which went to members of its Sooner Club on Dec. 7, is similar to directives that went out to boosters at Clemson, Florida State, Auburn, Alabama, Kentucky and others as the tax bill took shape.

Under current rules, the IRS allowed boosters to deduct up to 80 percent of donations related to season tickets, a perk that created the widespread practice in major college sports of requiring annual donations to purchase season tickets for football and men’s basketball and rewarding the chance to buy the best seats and suites to those who gave the most.

Oklahoma’s “Pay It Forward” program will allow boosters to make donations for their next two years of football season tickets by Dec. 31. The letter sent to Sooner Club members included hypothetical situations in which “Jane Donor” should consider making multiple years’ worth of her $5,000 annual donation and “Joe and Jane Donor,” who pledged $150,000 over three years for premium seating, should consider sending in the entire amount before the end of the month.

Oklahoma officials, whose football team is preparing for an appearance in the upcoming College Football Playoff, did not reply to a request to comment.

Tax law experts long have criticized the college athletics donation deductions as unfair because it essentially gives a federal subsidy to wealthy college sports fans for their season tickets. Normally, tax law prohibits deductions for “quid pro quo transactions,” situations in which money given to a nonprofit brings something of equal value in return. Otherwise, college students could write off tuition payments, and patients could deduct hospital bills from their taxes.

In 2014, Duke law school professor Richard Schmalbeck argued for the elimination of college athletics tickets deductions in a paper entitled, “Ending the Sweetheart Deal between Big-Time College Sports and the Tax System.” The next year, President Obama tried to end the write-offs in a proposed budget that was ultimately shot down by Republicans in Congress.

In a phone interview, Schmalbeck said he was pleasantly surprised to see his argument accepted, a few years later, by some of the same Republicans.  

“I didn’t feel that I had made any kind of Nobel Prize winning discovery in noticing this, it was a crazy thing to allow,” Schmalbeck said. “There was no good tax policy justification for this.”

It’s not clear what changed Republican minds on the issue, but Schmalbeck guessed GOP lawmakers were desperate to find some revenue-producing measures to mitigate the impact on federal coffers of the many tax cuts in the bill.

“I think they were just looking around for any ideas to raise a little bit of a revenue here or there, and this was one of them,” he said.

A spokesman for U.S. Rep. Kevin Brady (R-Tex.) described the current college sports deduction as “the epitome of a special interest loophole” to the Austin American-Statesman.  

“For the sake of providing fairness to all taxpayers, this college sports quid pro quo needs to end,” the spokesman said.

Eliminating the deductions will generate an estimated $1.9 billion in federal revenue over the next decade, according to the Joint Committee on Taxation. But that’s not the only way the tax overhaul will cost college sports programs money. The legislation also includes a 21 percent excise tax on annual pay above $1 million for employees at nonprofits, which will hit every major college with a coach or athletic director  who earns seven figures.

Colleges could get around this tax, Schmalbeck thinks, by restructuring coach pay to come from multiple sources, such as booster clubs and radio and television networks, as opposed to directly from the school. The ticket donation deduction will be harder to work around, though, Schmalbeck said.  

As the tax bill took shape this month, college sports officials raised the concern that the new taxes will force college athletic departments to cut so-called “Olympic sports,” many of which do not generate enough revenue to pay for themselves.

“You’re really just hitting right at the Olympic effort in our country,” Lead1’s McMillen said. “When you put college sports into a business box, these are the consequences, and that’s what these legislators are doing.”

Critics of the spending habits of major college sports programs such as Gerald Gurney, however, argue that it was the power brokers at the NCAA and in college conferences and athletics departments who made college sports into big businesses, and they’re finally losing an unfair tax benefit they have enjoyed for decades.

Gurney — board member of the Drake Group, a think tank that advocates an overhaul of major college sports —said McMillen is probably right that the new tax bills probably will result in colleges cutting Olympic sports, but it doesn’t have to be that way.

“They could deal with the terrific amount of departmental waste, the growing front offices, and cut pay for the celebrity coaches in football and basketball,” Gurney said in a phone interview. “But they won’t. … Olympic sports offer the path of least resistance. It’s the low-hanging fruit.”

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