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Should the NFL be tax-exempt?

Oct. 16, 2012 12:23pm Meredith Jessup

Yes, that NFL — the National Football League. The NFL that raked in $184 million from its 32 member teams, holds over $1 billion in assets and generates an estimated $9 billion annually. Why on earth would they be tax-exempt?

As it turns out, they already are.

Sen. Tom Coburns Wastebook 2012 reveals tax loopholes for professional sports orgs

A new reportfrom Sen. Tom Coburn outlines some of the biggest wastes and loopholes in America’s tax system, including this so-called professional sports loophole:

The National Football League (NFL), the National Hockey League (NHL), and the Professional Golfers’ Association (PGA) classify themselves as non-profit organizations to exempt themselves from federal income taxes on earnings. Smaller sports leagues, such as the National Lacrosse League, are also using the tax status. Taxpayers may be losing at least $91 million subsidizing these tax loopholes for professional sports leagues that generate billions of dollars annually in profits.

While I’m surprised to hear that the PGA churns out such big profits for such a boring sport, I’m even more surprised to learn that these sports institutions are tax dodgers masquerading as non-profit organizations. Coburn explains further:

These organizations are taking advantage of the provision of the tax code that allows industry and trade groups, such as the U.S. Chamber of Commerce or the Natural Resources Defense Council, to qualify as non-profit and tax-exempt. None of these groups can promote a specific brand within an industry but each may promote an industry as a whole. Qualifying organizations pay taxes on few types of income and expenditures, including lobbying. State and local governments usually exempt these organizations from state income and sales tax as well, a boon worth an estimated $10 billion to the nonprofit sector.

Seeing the advantage in operating largely tax-free, the NFL, NHL, and PGA are registered with the Internal Revenue Service (IRS) as nonprofit organizations. These leagues assert they help the professional sport in each of their leagues. For example, on its 2010 tax return, the NFL described itself as a “trade association promoting interests of its 32 member clubs.” The NHL said its mission is “to perpetuate professional hockey in the US and Canada.” These benign statements aside, major professional sports leagues are hardly in the business of simply promoting the hockey, football, or golf industry. They are in fact businesses – designed to make money.

For more on Coburn’s Wastebook 2012, click here.

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Comments (4)

jero8194
Posted on October 18, 2012 at 3:18pm
There is enough blame to go around. Republicans, Democrats and Independents. This is an outrage. What upsets me is this book is published and people read it and do nothing about it. This has been going on for years. It has just been the last three that this book has been published.

What do I think should be done. Every program, grant or expenditures should be brought up on its own. Never bundle it with any other issue. Each should be voted up or down on their own accord. If a item is passed like these wasteful items, the congressman and senator that vote for it should be banned from getting any federal monies for three years.

What ticks me off more than this book of waste is how can our representatives vote for these. Better yet how can a whole body of reps vote for these. The answer is they don’t care. It is not their money. The book is good but it is after the fact. It should be every congressman and senators job to make sure this doesn’t happen. The thing is one congressman talks to another congressman and makes a deal. You vote for mine, I vote for yours. So if it happens from now on three years of a dry well to that state. If it happens after the three year period, no federal money is assigned to that state forever.

What will probably happen will be projects that would only require 100 million will be asking for 300 million so the three year penalty will still be funded. Hopefully though after three years the loop holes will be closed.

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rayne
Posted on October 16, 2012 at 4:58pm
I don’t know if you call this a “loophole”. They just match the IRS definition of what a “non-profit” is–which is actually pretty easy to do. “Non-profit” means all extra profits that would go to shareholders as dividends, etc., are instead not allowed to go to share-holders, but instead must be put back into the business.

“Non-profit” does not mean “operates as a loss.” Non-profits still want to be in the black–you can’t operate very long if you’re perpetually in the red. But for some reason that hasn’t yet been challenged or changed (because no one brings up the issue), the IRS has decided that all non-profits are tax-exempt (in most cases).

Note that while the tax code says shareholders get little to no benefit from non-profits, there’s really not many (any?) limits or regs. saying that employees/directors of non-profits cannot make an obscene amount of money.

This article misses the mark. It brings up a point that is perhaps valid, but there are much bigger issues at play here. Like, if we redefine “non-profit” or change who is tax-exempt, where are those new lines drawn?

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woodyee
Posted on October 16, 2012 at 2:34pm
If Gaybama wants to tax the rich, he ought to put his money in his mouth and put an end to this outrage!

We must also elect more tea-party, or tea-party-minded people into Congress in order to put an end to the practice of politicians making careers out of public service, and using slight-of-hand to enrich themselves, usually by selling their “services” – votes, and the gross practice of using insider information to do for themselves what they send others to jail for.

Focus – FOCUS. POLITICIANS exempted the NFL, not the NFL. POLITICIANS write law, not the NFL. POLITICIANS sign bills, not the NFL. POLITICIANS exempt themselves from laws they REQUIRE you and I to obey, not the NFL. POLITICIANS are our problem, not the NFL.

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labec
Posted on October 16, 2012 at 12:38pm
Should the NFL, PGA, NHL be Tax Exexmpt: NO. Fricken NO! For Extreme Profit ONLY!
NAACP is the Racial Army of the Obama Political Campaign and Agenda. NO!

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