Understanding
jurisdiction over Scholarship Funds and Prize Money
THE HIGH SCHOOL LEAGUES AND COLLEGIATE ATHLETIC ASSOCIATIONS CREATE LEGISLATION FOR PARTICIPATION IN THEIR COMPETITIONS AND TOURNAMENTS WHICH INCLUDES ACCEPTING PRIZE MONEY BASED ON PLACE FINISH. SCHOLARSHIPS 4 US, LLC ENSURES STUDENTS MAINTAIN COMPLIANT THROUGH THE MANAGEMENT OF PRIZE MONEY IN THE TRUST OF SCHOLARSHIPS 4 US.​
IRS
The IRS Topic No. 421 scholarships, fellowship grants, and other grants recognizes these award earnings as tax-free so as long the "amount is used to pay for tuition and fees required for enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment required for courses at the educational institution." Any other usage of the awards for incidental expenses, such as room and board, travel or optional equipment must be reported as gross income.
The NFHS writes the playing guidelines for its member state associations or leagues which includes the jurisdiction to determine high school students and potential collegiate athletes ineligible to compete in their competitions and tournaments if they accept Prize Money based on Place Finish. However, each state association or league has autonomy to implement their own governing principles to determine eligibility requirements.
NFHS
NCAA®
The NCAA® permits potential collegiate student-athletes to earn prize money based on place finish in events so long as the amount does not exceed actual and necessary expenses to participate. The NCAA® requires all potential collegiate student-athletes to complete their Eligibility Questionnaire to determine if amateurism status has been maintained by requesting documentation of sports participation and any accepted prize money. These records are to be kept by the student-athlete and any misinformation or falsification could lead to a determination resulting in a permanent ineligibility status.
Potential collegiate student-athletes must complete their Eligibility Questionnaire and the bylaws state that no potential collegiate student-athlete can accept prize money after July 31st, the 'last day of summer,' prior to enrolling into an NAIA® institution. These records are to be kept by the student-athlete and any misinformation or falsification could lead to a determination resulting in a permanent ineligibility status.
NAIA®
NJCAA®
Potential collegiate student-athletes must complete their Amateurism Questionnaire and the bylaws state that no potential collegiate student-athlete can accept prize money after their 19th birthday or once enrolled in an NJCAA® institution- whichever one comes first. These records are to be kept by the student-athlete and any misinformation or falsification could lead to a determination resulting in a permanent ineligibility Status.
Potential collegiate student-athletes must complete their Eligibility Certificate and the bylaws do not state legislation governing student-athletes from accepting prize money based on place finish.
NACE®