MORGANTOWN, W.Va. — The WVU Athletics Department expects to pay at least $1.3 million next year in a new federal excise tax as a result of the tax reform bill that passed Congress earlier this week.
That bill, expected to be signed into law by President Donald Trump early next year, includes provisions impacting college sports, including a 21 percent excise tax on those with the highest salaries in non-profit organizations like colleges and universities. The excise tax kicks in on an organization’s five highest paid employees who make more than $1 million a year.
At WVU that would apply to both the salaries of football coach Dana Holgorsen, who stands to make $3.6 million in 2018 and basketball coach Bob Huggins, contracted to make $3.85 million in 2018. Meaning the athletic department will have to pay the tax, WVU Athletics Director Shane Lyons said.
“Coming out of the chute we know there’s about a $1.3 million impact,” Lyons said during a Thursday appearance on MetroNews “Talkline.” “The others? That’s a wait and see game.”
The others that Lyons is talking about includes a provision that would remove the 80 percent tax deduction for donations made to organizations like the Mountaineer Athletic Club for priority seating. The fundraising arm of the athletic department has 4,500 donors who give varying amounts. They do so in many cases to get better locations for season tickets.
Lyons said he expects to learn something about those donors moving forward.
“I think this will really truly show whether people are giving in the past for tax deductions or is it truly for philanthropic reasons of giving back to the university, giving back to student athletes,” Lyons said.
He said there remain many unknowns on how the department’s budget will be impacted by the changes. The athletic department uses a lot of its MAC money to pay back the university for athletic scholarships, a bill that’s now about $10 million a year.
Lyons said the provisions of the bill are going to change the landscape of college sports.
“You have to adapt to change and it is what it is and we’ve got to make adjustments,” Lyons said. “It’s just a million dollars out of a budget that we’re not going to be able to do things–maybe we’ll have to do it in another way. We’ll just have to figure it out going forward.”
The changes will kick in after President Trump signs the tax reform bill into law.