Thursday, August 2, 2007

IRS rules youth sports club must withhold taxes from coaches' pay

The Internal Revenue Service has reached an agreement with a Connecticut youth soccer association that requires the league to treat coaches it has hired as employees rather than independent contractors, according to the New York Times.

The Fairfield United Soccer Association pays $2,500 a year to several dozen coaches who have high-level soccer skills. The group now will have to withhold income taxes from those payments. The Fairfield association also agreed to pay $11,600 in back taxes.

The case is seen as having major implications across the country in youth sports where volunteer parent organizations hire skilled coaches for their elite teams.

"For 20 years, all of these coaches have been reported as 1099 employees for everybody," Jay Skelton, the Fairfield group's president, told the Times. "If you talk to 100 clubs, I guarantee almost every one, if not all, would declare these guys as independent contractors."

"Unfortunately, we became the test case," he said.