Caleb Williams finally signed a contract with the Chicago Bears earlier this week even though it was not what he wanted. The NFL shot down his unique proposals to try and avoid taxes in the state of Illinois.
Both of the efforts were denied, so he agreed to a standard four-year, $39 million deal instead.
According to Mike Florio, Williams (and his camp) tried to get creative. The 22-year-old quarterback went to the organization with a pair of propositions on how he would get paid.
Caleb Williams doesn’t want to pay taxes.
One such idea involved Williams getting paid as an LLC. LLCs in Illinois have zero income tax filing requirements, which would mean that his contract would be state tax exempt. The IRS also does not consider an LLC to be a distinct, separate entity for tax purposes — so there is a lot of flexibility with how taxes can be paid by the LLC on the national level.
There is not any language in the NFL/NFLPA’s collective bargaining agreement that would prevent a team from paying its player through an LLC. Because it is not outlined in the rules, Chicago went to the National Football League to ask permission. The league shot it down. It ruled that a player’s contract money cannot go to a business entity other than the player himself.
Williams also went to the Bears with a second idea. He asked them to pay him through a forgivable loan, which is more like a grant with conditions rather than a traditional loan. If his contract was structured in such a manner, the No. 1 overall pick would not have to pay taxes on the deal until the forgivable loan was fully forgiven. That would have created a tax-free timeline of up to 10 years.
The NFL also shot down the forgivable loan. Though no specific reason was provided, it was likely because a revolutionary structure of that nature would have changed the entire landscape of player contracts in the future.
Caleb Williams signed a normal rookie contract as a result of the denials. His deal is structured per the standard. He has to pay taxes!
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