NFL must turn over nonprofit status
March 31, 2014
The NFL is one of the most widely recognized and profitable organizations in the U.S., yet its league office is exempt from paying federal income taxes. As an organization without a charitable purpose, allowing any of its functions, no matter how small, to slip under the radar of the Internal Revenue Service is a gross abuse of the benefits of nonprofit status.
The NFL is a 501(c)(6) organization, the source of its exemption, but anti-corruption organization Rootstrikers and Sen. Tom Coburn (R–Oklahoma) are challenging the league’s nonprofit status in a move that has earned support in the last several years. A Change.org petition claiming the NFL does not provide charitable services and should be required to pay taxes has garnered 360,690 signatures as of press time. The Congressional Ways and Means Committee has drafted a taxation overhaul that would include a clause revoking the nonprofit status of all professional sports leagues, but the proposal is still under debate as of press time.
The IRS should take heed and revoke the NFL’s exemption. Because its main duty is organizing games, determining policies and regulating official products, the league office hardly qualifies as a social institution.
In response to the petition, the NFL claims the federal tax exemption is justified because individual teams, which are privately owned, pay taxes and NFL executives file their own personal taxes on their compensation, according to an Oct. 27 NBC News analysis. The league office is a small component in the grand scheme of the NFL, but the principle of the matter is that the NFL does not provide charitable services, so none of its parts should have nonprofit status. Its activities are primarily self-promoting and for its own profit, and the country should not be swallowing the cost.
Requiring the NFL league office to fork over federal income taxes would not damage its ability to manage teams and would add a revenue stream to the national coffers. According to a May 2013 analysis by Congress’ Joint Committee on Taxation, taxing the NFL would bring in $109 million in tax revenue over the next decade.
Football as a sport is not going to fail if the organizer has to cough up more cash. If the movement succeeds in revoking the NFL’s nonprofit status, the ruling would apply to all major professional sports organizations. The NFL has not had to pay taxes since 1966, when Congress granted it nonprofit status to ease the merger with the American Football League.
The IRS should revoke the NFL’s nonprofit status because there is no reasonable justification for its tax exemption. The country depends on profitable individuals and organizations to function and the NFL needs to do its part.