PROVO — You have likely seen them at college sports events, those folks who catch the action from courtside at basketball games and from seats on the 50-yard line at football games.
Those perks come at a price. They generally require donations paid on top of game tickets' face value. Athletic departments use the contributions for general operations, facility improvements or scholarships, often for students in "nonrevenue sports," which are sports beside football and mens basketball.
Until recently, the sports fan who made that extra effort not only got good seats and the satisfaction of knowing their donation was helping to fund athletic scholarships, they got the added bonus of a sizable tax deduction for the charitable deduction.
Under the newly passed Tax Cuts and Jobs Act, tax deductions for ticket-related donations to universities are going away.
The hope is that loyal college sports fans will continue their giving in any event.
In Utah, athletic departments and booster organizations such as the University of Utah's Crimson Club or Brigham Young University's Cougar Club are carefully tracking what the change in tax policy means in terms of giving. Millions of dollars are at stake.
"We are monitoring how this will impact BYU in the future just as other universities are doing so around the country. We believe, however, that our fan base is incredibly loyal and will continue to support BYU," said spokeswoman Carri Jenkins.
Some universities, such as BYU and Utah State University, alerted donors of possible changes late last year, which gave them an opportunity to adjust their giving while the donations were eligible as deductions.
The U. is "still researching the implications of the new tax act and do not want to speak prematurely until we have more information. As soon as we have a good understanding of how it impacts our donors, we will certainly communicate it," said Liz Abel, the U.'s senior associate athletics director.
Bonnie B. Villarreal, a lecturer in USU's Jon M. Huntsman School of Business and a self-employed tax consultant, said the new tax law also affects a deduction that businesses have relied on when they purchased tickets to entertain clients.
"The entertainment deduction has also gone away," Villarreal said.
The impacts to ticket sales and giving will not be immediately apparent, but the sweeping changes in the tax law will likely give people pause about their ability or desire to support programs when tax benefits no longer exist.
"How much of your charity is really charity?" Villarreal said.
Villarreal, who also serves on board of a nonprofit organization, worries how other aspects of tax reform, such as the increased standard deduction, will impact charitable giving in general.
"We're concerned. Although people choose what charity they might want to give money to, the incentive, especially to get it done, and get your donations made before year-end, kind of goes away when you're probably not going to get a tax benefit from it. You're going to do it only because you really want support the organization," she said.
Changes to tax laws pose new challenges to taxpayers, tax professionals and state governments, she said.
California, for instance, is considering legislation to allow taxpayers to make donations to the state in an effort to limit the impacts of the new federal tax law.
"The state legislation would create a state-run nonprofit, the California Excellence Fund, to accept donations to fund schools, road repairs and everything else in the state budget. The donations would allow residents to reduce their state income tax payments and also receive a federal charitable tax deduction," the Los Angeles Times reported.23 comments on this story
"You see some creativity and interesting stuff when people react to 'OK, they've changed the rules. How do I get around it?'" Villarreal said.
"As soon as Congress draws the lines in the sand, people look for 'How can I step over that line and still stay legal and still get the benefit I've been used to?'
"So you see a lot of creative stuff like what California's doing. There's a lot of people watching to see what other states are going to jump on that and then, if that will get somehow legislated out of possibility."