NFL to give up tax-exempt status amid congressional pressure
For years, the NFL has avoided paying taxes. Think about that.
For decades, the league — not the teams themselves who pay taxes — which makes an estimated $10 billion in annual revenue has avoided paying Uncle Sam because of a line of code that allowed them to do so. Section 501(c)(6) of the Internal Revenue Code says that “professional football leagues” are free to be exempt, which was a way that helped allow the NFL and old American Football League, its one-time rival, join forced into the monster it now is, back in 1966.
“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” have been allowed to earn that status and avoid paying taxes.
In recent years, congressional forces have rallied against this tax-exempt status — as well as with other sports leagues, such as the PGA and NHL — and have pressured the leagues to give it up and pay their fair share. The NFL apparently has the money and is willing to get ahead of the game to avoid a public-relations nightmare.
In the past, the NFL league office has argued that it is indeed a not-for-profit organization. Check out this quote from league spokesman Brian McCarthy to ESPN in 2013 in response to Sen. Tom Coburn’s suggestion to amend the Marketplace Fairness Act and end the tax-exempt status:
“The NFL League Office is a not-for-profit organization,” McCarthy wrote. “The NFL League Office receives funding from the 32 member clubs to cover its non-revenue overhead activities such as office rent, League Office salaries and game officiating. In addition, the NFL League Office collects revenues on behalf of the 32 member clubs and distributes those revenues to the clubs. All national revenues (e.g. broadcast TV payments) collected and paid to the member clubs, as well as local revenues earned individually by the clubs, are subject to tax at the club level.”
The league has apparently changed its stance. It will be interesting to see how commissioner Roger Goodell handles questioning of why the league now has decided to reverse field on this issue and pay out millions of dollars to the IRS.
We also will find out, per this new designation, exactly what Goodell and other key NFL executives make to the penny per year, given that it’s now public record. So it might be a positive PR move to give up the status willingly, but we suspect the sympathy only will go so far when it’s revealed exactly what these big cats take home in pay.
– – – – – – –
Eric Edholm is a writer for Shutdown Corner on Yahoo Sports. Have a tip? Email him at [email protected] or follow him on Twitter! Follow @Eric_Edholm
