(CN) - A former head football coach for the University of Nebraska sued the school's board of regents on Friday, claiming it created an improper tax liability for him on over a million dollars of income he never received.
Scott Frost started as the head football coach on Dec. 3, 2017, with addendums added to the contract extending its expiration to Dec. 31, 2026. However, he says in his complaint filed in Lancaster District Court that the university terminated him without cause on Sept. 11, 2022.
The firing of Frost - who is also a former Cornhuskers quarterback - came after a home loss to Georgia Southern, with a 16-31 record, three games into his fifth season.
"Coach Frost seeks this relief as a last resort and after years of attempting to navigate (unsuccessfully) the problems created for him by the university, which began only months after he was terminated," he says in the complaint.
Frost's contract stated that if the university terminated him without cause, he'd receive liquidated damages from that date to the end of his contract. Additionally, if he gained employment with a qualifying football program during that time, the university could offset those damages based off his compensation - though this aspect of the contract appears in dispute.
Frost returned in December 2024 to a prior coaching job at the University of Central Florida.
According to Frost, the university told him in December 2022 that it would include the 2025 and 2026 liquidated damages payments on his W-2 for 2022. That financial move was wrong, he claims, and it made a $1.7 million income tax liability for Frost on income he never received.
Frost argues these payments were guaranteed and couldn't be reduced or offset. However, the university in a letter said it could change the payments without any explanation.
The issue appears to lay in addendums to his contract. In correspondence with the university, Frost says he asked it to confirm the offset provision expired on Dec. 31, 2024 - the original contract expiration date. The university in its response said it believed his offset obligations lasted until Dec. 31, 2026.
Frost says this stance disregards the contract's terms and the addendums. It also ignores the reality that Frost wasn't the head coach after Sept. 11, 2022. Additionally, he claims, it overlooks the university's decision to include the 2025 and 2026 liquidated damages along with his 2022 salary in that year's taxable income.
"In short, the university's evolving positions related to the amounts owed to Coach Frost are muddled, internally inconsistent and transparently self-serving," Frost says. "Notably, even when maintaining (incorrectly) that Coach Frost completely forfeited amounts owed to him by accepting subsequent employment, the University still maintains the propriety of its decision to report the 2025 and 2026 liquidated damages as taxable income for Coach Frost in 2022."
Frost argues his claim is bolstered by an IRS audit.
Frost says he filed an amended return for some $4.8 million in income for 2022, as opposed to the $9.5 million the university claimed on his W-2.
"The IRS reviewed that issue during the audit, and did not make any adjustments to Coach Frost's position that the amount reflected on the W-2 issued by the university was incorrect," Frost says. "Indeed, the IRS rejected the position taken by the university and determined that only $4,873,228 should be treated as actual wages for the 2022 tax period."
Frost asks a judge to award him no less than $5 million, declare that the offset provision in his contract expired in December 2024, and grant any other relief they deem appropriate.
A representative for the university couldn't be reached for comment after business hours Friday.
Source: Courthouse News Service
