The NFL Is A Tax-Exempt Organization — But One Senator Wants To Change That

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http://thinkprogress.org/alyssa/2013/04/25/1923231/coburn-nfl-tax-exempt/?mobile=nc




Oklahoma Sen. Tom Coburn (R) today introduced an amendment to the Marketplace Fairness Act that would end the practice of allowing professional sports leagues to qualify as tax-exempt organizations, a move that would hit leagues like the National Football League, the Professional Golfers Association (PGA) Tour, and the National Hockey League, among others.

Since 1966, the tax code has allowed leagues to classify as 501(c)(6) charitable organizations — a classification used by trade and industry organizations — under the assumption that the leagues were promoting the general value of their sports. But Coburn’s amendment asserts that the leagues are not non-profits engaged in the promotion of their sports but instead are businesses interested solely in the promotion of their business; that is, the NFL isn’t so much concerned about promoting the general sport of football as it is concerned with promoting NFL football, because it is the NFL brand and the NFL teams and logos and products that make it a profitable business. The NFL, for instance, didn’t seem interested in promoting the general spread of football when a competitor league, the United States Football League, was formed in 1983. Likewise, the PGA Tour, NHL, and other sports leagues serve to promote their brand of their sports, not the sport as a whole.

Further, the leagues hardly pay their executives as if they are non-profits. The NFL paid $51.5 million to just eight executives in 2010, according to Coburn, and other leagues are similar — PGA commissioner Tim Finchem made $5.2 million that year, while NHL commissioner Gary Bettman took home $4.3 million.

[Union Scribe]

1. I'd never heard of this.

The first thing about this article that shocked me was the tax exemptions. The second thing was that a Republican wants to tax big businesses.

[AnotherMcIntosh]

2. The actual language of IRC § 501 provides, in part,

&quot a) Exemption from taxation
An organization described in subsection (c) or (d) or section 401 (a) shall be exempt from taxation under this subtitle unless such exemption is denied under section 502 or 503.
...
&quot c) List of exempt organizations
The following organizations are referred to in subsection (a):
...
(6) Business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues (whether or not administering a pension fund for football players), not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual." (emphasis added)

http://www.law.cornell.edu/uscode/text/26/501

If the IRS would enforce the existing law, it would appear that the NFL would not qualify to have a tax-exempt status.

Arguably, if Coburn's effort fails, he and other Republicans can disingenuously claim that the defeat of the proposed legislation has established that the NFL qualifies as a tax-exempt organization notwithstanding the plain language of IRC § 501(c)(6). No one should be too quick to assume that he is doing this for a good purpose.

Added:
The author of the origional article is wrong in saying "Since 1966, the tax code has allowed leagues to classify as 501(c)(6) charitable organizations". (emphasis added) The subsection stands on its own for providing a tax-exempt status and does not require a charitable intent or purpose.

[ctsnowman]

4. Good catch. I was about to think a con was going to do something right.

[NewJeffCT]

8. Thanks

The league is pretty socialistic - it takes all the TV revenue that comes in and distributes it evenly among the teams, even though certain teams (Dallas Cowboys for one) are consistently more popular than others and responsible for a higher percentage of revenues. Maybe that's why Coburn wants to tax them - he hates socialism?

However, the individual owners can make a lot of money through increased franchise value. The Dallas Cowboys are worth $2.1 billion, according to Forbes. http://www.forbes.com/nfl-valuations/ Jerry Jones bought the team in 1989 for $140 million - so, the value has increased 1500% in that time.

[Zoonart]

3. Aha!

Now I know why some folks call football a religion.

[Historic NY]

5. No wonder were going broke....they gave the store away.

[Squinch]

6. This should absolutely happen, but who wants to bet it doesn't?

[groundloop]

7. Damn, I never realized the NFL was tax exempt.

Yes, on this one issue I agree with Coburn. The NFL doesn't need tax exempt status, they're plenty rich enough to pay their fair share.

And while we're at it we need to do something about the practice of NFL teams sponging off of taxpayers in the form of taxpayer funded stadiums. In my neck of the woods the Falcons apparently are going to have a new stadium handed to them at taxpayer expense, while there's nothing whatsoever wrong with the Georgia Dome (which is already relatively new).

[florida08]

9. Brilliant

Like others I had no idea either although nothing is surprising anymore but I freaking love it! You go to the head of the class for awesomeness

Damn shame us lowlife low incomers are milking the system so much..

[KharmaTrain]

10. Long Overdue...

...the NFL has long profited from all sorts of government-related perks. In addition to their special tax status (drawn up before the NFL really began to merchandise itself) the also benefit from a free farm system maintained at every state university across the country. Then there are the tax-payer funded stadiums that dominate throughout the league...yet another "perk" thrown at a select number of very rich owners. It's long overdue to take away the anti-trust exemption from ALL sports and stop the subsidizing of this industry...the NFL isn't going to go off-shore...

[CBGLuthier]

11. One thing Oklahoma will NEVER have is an NFL Team

Not because of this but because college football is the only denomination of that religion allowed in the state.