The Internal Revenue Service is targeting youth soccer leagues around the country, as they have grown in size, and their budgets have grown. The central question, is whether the coaches and referees that are part of the league considered independent contractors as the youth league contends or are they employees as the IRS considers them to be. For the Fairfield United Soccer Association in Connecticut, it is a $334, 441 question, as the amount that the IRS says is owed in back taxes. Fairfield has appealed against the amount, one of the largest in any non-profit youth sports history. (NYT, June 25, 2006)
Soccer is in the IRS radar as it is one of the fastest growing sports, if not the fastest. The once mom and pop operations have greatly expanded and now require accountants, payrolls, registrars, and 1099 forms. In 1974, there were 100,000 registered soccer players according to US Youth Soccer, now that figure has grown to more than 3 million. Wholesale soccer sporting goods now generate $215 million in business.
Many soccer leagues are watching this case closely. At stake, are youth soccer leagues to be defined as a ball and field with 22 kids and their families coaching them, and lots of fun. Or with the stakes getting higher and professionals getting involved, these leagues now have to deal with the intricacies of the tax code which is not fun.
A troubled parent writes to the NYT fearing a future with too much pressure as a parent and coach: “a future filled with games halfway across the state, professional coaching, and year round practice. No wonder the IRS is interested in youth soccer: it’s big business and not neccesarily big fun.”
The next big step seems very clear to me. The MLS and their clubs should jump into this debate and open up soccer academies affiliated and managed by the clubs. Not training camps and soccer programs. I think a parent probably pays as much shuttling a talented child through these training and coaching programs, traveling to games and soccer tourneys, and in soccer equipment, as they would if the child was in an academy run by the Los Angeles Galaxy.
2 comments on “IRS: Youth soccer leagues are big business”
Shourin, phenomenal piece and it hits home for me. I grew up in Fairfield County, CT and my currect home in MA boosts a soccer program of 900 kids, though we have a population 1/4 of Fairfield.
Thankfully, we do not pay coaches directly. Part of this is the ability to draw on soccer resources in MA that are here because of the Revolution, which are not available in CT. We hire professional coaching firms as Player Development Officers, who are (I assume) legit with the IRS and INS (half of England seems to have found employment in MA as PDOs). Thank goodness.
You are one hundred percent correct on the need for the MLS to get involved. The new Colorado Rapids stadium is surrounded by 24 youth fields for the Denver area. Brilliant!
But the New York Red Bulls (the closest MLS team to Fairfield), is not a viable option for FUSA, nor are the Rev a viable option for Stonington, CT on the other end of I-95.
That said, CT Youth Soccer lists over 110 affiliated town soccer clubs. Surely some enterporising ex-players can provide a formal, professional coaching or player development option.
In the Northeast, with a high population density and rabid soccer interest, that will happen, but what about Wyoming or Iowa or Kansas?
The Kansas City Wizards are a pretty succesful MLS club, in terms of performance and attendence. I think the Wizards should really look into becoming a zonal center of soccer excellence.