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WHY DID THE NFL GIVE UP ITS TAX-EXEMPT STATUS?

HandelontheLaw.com Staff Writer

Wednesday, December 07, 2016



WHY DID THE NFL GIVE UP ITS TAX-EXEMPT STATUS?
Football Player

In late April 2015, the National Football League’s (NFL) League Office voluntarily relinquished its tax exempt status.

The NFL has been a tax exempt organization for decades. Why? Because §501(c)(6) of the Internal Revenue Code exempts "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."

The NFL League Office is a not-for-profit organization. The 32 member clubs (Detroit Lions, San Francisco 49ers, etc.), fund the League Office’s non-revenue overhead, such as office rent, League Office salaries and game officiating expenses. The League Office also collects revenues for the 32 clubs and distributes those revenues to the clubs. The clubs – the individual teams - pay the taxes.

Why would the NFL League Office surrender its tax exempt status? Several reasons have been suggested. Some say that it is a Public Relations stunt to improve the NFL’s reputation without adequately addressing tougher issues, such as players’ domestic violence and drug abuse. The loss of tax-exempt status is a minor matter, relative to the taxes paid by the teams with or without the League Office’s tax exempt status.

Others expand on the Public Relations aspect, stating that tax exempt status was politically embarrassing to the NFL League Office, as the “average Joe” does not understand how the League Office could possibly be tax exempt and does not readily accept the explanation. The League Office would rather move beyond that embarrassment, if possible.

Others say the NFL League Office is far more concerned with secrecy about its executives’ salaries. With tax-exempt status, the League Office had to disclose top executives’ salaries, for example, the $44.2 million paid to NFL Commissioner Roger Goodell in 2012 [insert whistle here]. Foregoing tax-exempt status means no more IRS Form 990 and considerably more privacy about top executive salaries.

Finally, its Finance Committee studied the impact of surrendering tax exempt status and found that functions and operations will continue with little material change if tax exempt status is relinquished.

Based on all PR and privacy advantages with no material disadvantage, the NFL’s League Office chose to abandon tax exempt status.

By Kathy Catanzarite


Source: Kathy Catanzarite - Handelonthelaw.com

Note from HandelontheLaw.com: This article is to be used as an educational guide only and should not be interpreted as a legal consultation. Readers of this article are advised to seek an attorney if a legal consultation is needed. Laws may vary by state and are subject to change, thus the accuracy of this information can not be guaranteed. Readers act on this information solely at their own risk. Neither the author, handelonthelaw.com, or any of its affiliates shall have any liability stemming from this article.





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