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Georgia seeks to avoid paying excise tax on top-paid coaches

ATHENS, Ga. – Georgia is taking steps that would allow it to attempt to avoid having to pay an excise tax aimed at the highest paid college coaches, a move that could save its athletics program around $2 million a year.

The excise tax is part of the changes to federal legislation enacted into law in December 2017.

It subjects certain tax-exempt organizations to a 21% tax on compensation above $1 million — including bonuses — that goes to any of their five highest-paid employees in a year.

Because the University of Georgia Athletic Association is set up as a 501(c)(3) organization, it would ordinarily be subject to the tax. But after consultation with university counsel, the association has not made any such payments, deputy athletic director for finance Stephanie Ransom said Monday.

Georgia head coach Kirby Smart's total compensation was $6.7 million in 2019.

As part of its upcoming federal tax return, the UGAA will contend that football coach Kirby Smart and men’s basketball coach Tom Crean are “common law” employees of the University of Georgia and not employed by the Athletic Association itself, according to Kathy Pitts, of UGA tax preparer Ernst & Young.

The university itself does not have recognition from the IRS as a 501(c)(3) organization. Instead, it operates as a part of the State of Georgia. So, it is not subject to the tax as the law is written.

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