It has long been known that Major League Baseball is exempt from anti-trust laws. But did you know that, along with the Professional Golfers Association Tour, the National Hockey League, the Professional Rodeo Cowboys Association and the National Football League, they were also a tax exempt non-profit organization? They gave up that exemption switching to a for-profit limited liability corporation in 2007. However, the other organizations have not and have recently come under fire from Congress, especially the NFL. An article in Forbes explains:
The National Football League takes in more than $9.5 billion per year and is exempt from Federal taxes. As a nonprofit, it earns more than the Y, the Red Cross, Goodwill, the Salvation Army or Catholic Charities – yet it stands as one of the greatest profit-generating commercial advertising, entertainment and media enterprises ever created.
For the love of Richard Sherman, how can this be?
An arcane tax code change that eased the 1966 merger of the NFL with the old American Football League landed the new combined entity in section 501(c)6 of the tax code, designated as an industry association. The designation actually covers “chambers of commerce, real estate boards, boards of trade, and professional football leagues.” This does not cover the league’s 32 individual franchises, which also rake in billions.
Now a national survey by Fairleigh Dickinson University is shining a light on this strange situation, and perhaps getting Americans to check off that nonprofit coverage faster than Peyton Manning can shout “Omaha!” [..]
The survey found that people are both surprised by the NFL’s tax-exempt status – and generally opposed to it. Only 13 percent correctly identified the league as not-for-profit.
Talk about a tax loop hole but this has not gone unnoticed by some congress members:
Sen. Angus King, I-Maine, is teaming up with Sen. Tom Coburn, R-Okla., in a push to strip the National Football League of its tax-exempt status.
King announced Wednesday he’s co-sponsoring Coburn’s Properly Reducing Overexemptions for Sports Act, which would affect the NFL and other wealthy professional sports leagues currently enjoying 501(c)(6) tax-exempt status. [..]
“For every dollar that goes out in a case like this, that’s a dollar my constituents have to pay in income taxes,” King tells U.S. News. “When I talk to people about the NFL being a non-profit tax-exempt organization they’re just astounded.”
Several senators seem sympathetic to the bill, King says, and he believes the proposal stands a good shot at become law – although he considers it possible a larger tax policy bill will envelop it.
In a letter to colleagues this week, Coburn and King said the bill would add $10 million a year to federal coffers. Major League Baseball voluntarily abandoned its tax-exempt status in 2007, the letter says, but the PGA Tour and the National Hockey League continue to avail themselves of the tax break.
The PRO Sports Act would specifically bar professional sports organizations with annual revenues of more than $10 million from 501(c)(6) status. That section (pdf) of the tax code is intended to assist trade groups.
Among the reasons King decided to join Coburn is the sky-high salary of NFL Commissioner Roger Goodell, who was paid nearly $30 million in 2011, according to non-profit tax filings.
Over at Huffington Post, there was a very educational info-grafic illustrating by how tax payers are being ripped off not only by the NFL but by the teams themselves.
Click on image to enlarge
In 2012, the NFL raked in $9.5 billion and gave $23 million back to the community in 2013.
In an interview on CNN, Sen. Coburn said: “This is a directed tax cut that to the league office, which means every other American pays a little bit more every year because we give the NFL league office a tax break and call them a non-profit. In fact, they’re not.”
On the other side of the Capitol building in the House, Tea Party Representative Jason Chaffetz (R-UT) is also ready to strip the NFL and NHL of their non-profit tax status. Cenk Uygur, host of The Young Turks, agrees.
It’s time to sack the NFL.