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What's the basis for that assertion that it will "surely come into question", though? Do you have any examples of organizations losing tax exempt status for similar reasons?Of course, they are allowed to have employees and those employees provide services that facilitate the University's non-profit academic mission. But when you pay students beyond FCOA schollies as W-2 employees solely for their athletic talents, that tax exempt status will surely come into question.
As far as I can tell, there's nothing in the IRS code that ties university tax status to athletics. If I have missed something, I'd be happy to see it.