NFL Drops Tax Exempt Status

Posted on Thursday, June 25, 2015

Following introduction of legislation to end the availability of tax-exempt status for professional sport leagues, the National Football League (NFL) central office announced that it will voluntarily relinquish its tax-exempt status under Code Sec. 501(c)(6). The proposed bill, Properly Reducing Overexemptions for Sports Act (PRO Sports Act) (H.R. 547), introduced in January, would remove professional sports leagues with gross receipts of more than $10 million from the list of tax-exempt organizations. The NFL, which generates billions in annual revenue and pays its officers multi-million dollar salaries, was also facing increasing public criticism for its claim to be operating as a tax-exempt.

Background

NFL Commissioner Roger Goodell made the announcement in an April 28 letter to team owners. Goodell explained that the league's central office had decided to surrender its tax-exempt status. Income earned by the league's 32 for-profit teams is taxable, and this will remain unchanged when the league office files returns as a taxable entity, Goodell added.

Reaction

Lawmakers welcomed the announcement.  "We are extremely pleased with the decision from the NFL to waive its tax-exempt status. We hope that the other professional sports organizations in similar situations will follow the positive example set by the NFL and pay their taxes just as everyone else is required to do," Rep. Jason Chaffetz, R-Utah, and Rep. Elijah Cummings, D-Md., said in a joint statement. Chaffetz was the sponsor of the PRO Sports Act.

Senator Angus King, I-Maine, characterized the NFL's decision as a "touchdown for the American people." Sen. Maria Cantwell, D-Wash., joined King in responding positively to the announcement. "The announcement by the NFL is a victory for taxpayers and a long overdue step forward for the nation's largest sports league," Cantwell said in a statement.

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