Why Does The U.S. Government Consider The National Football League A Charitable Organization?

February 26, 2014

While reading the Columbus (Ohio) Dispatch sports pages the other day, I noticed that National Football League Commissioner Roger Goodell received more than forty-four million dollars in compensation last year.  With nearly ten billion dollars in annual revenue, my first thought was how is it possible that the NFL can assert itself a non-profit financial entity for tax purposes, thus avoiding paying its fair share of income taxes?  The NFL is not the only sports league to declare itself tax-exempt, as Major League Baseball and the NCAA have as well.  More than likely, these three are not the only leagues to do so; they are the three of which I am aware.

Why is it that nearly seventy percent of U.S. corporations are regarded as non-profits?  According to the latest available Internal Revenue Service statistics, the percentage of non-profits has grown from twenty-four percent in 1986 to sixty-nine percent by 2008.  Why the sudden surge in the number of corporations that consider themselves not-for-profit?  This percentage is far higher when you add in sole proprietors and partnerships.

As the uproar over the alleged wrongdoings by the IRS, regarding the targeting of Republican political action committees’ tax-exempt status, has died down and with it any proven unlawful activity uncovered, Congress now needs to investigate why it was, in 1959 that the IRS changed the wording of the actual law regarding the qualifications for tax-exemption status.  I am not an attorney, nor a tax expert (who is?); however, the law as written by Congress in Section 501(C) of the tax code requires any entity not organized for profit, applying for tax-exempt status as a social welfare organization to be operated “exclusively” for the promotion of social welfare.

As a former audit supervisor with the Auditor of State of Ohio, I understand how the perception of improprieties over the IRS choosing to determine the validity of the applications (isn’t that their job?) of far more Republican PACs than Democratic groups because, judging solely by the number of commercials these PACs air during elections, far more Republican PACs have been created since Barack Obama was first elected president than Democratic PACs.  As an auditor, one cannot look at every single revenue source nor every expenditure, you must rely on materiality.  If far more Republican PACs are filing for tax-exempt status than Democratic PACs, it only makes sense that many more Republican PACs will be audited.

The real crime that comes to light over this alleged transgression though, is why, in 1959 did the IRS change its interpretation of the 501(C) code, when they changed the wording of “exclusively” to “primarily” regarding an organization’s civic duty as a promoter of social welfare.  What exactly is the kind of social welfare being promoted “primarily,” let alone “exclusively” by the National Football League and a great many other tax evaders?

My fellow Buckeye, John Kaskinen, the commissioner of the Internal Revenue Service, needs to be called before Congress and be informed that his agency will immediately change the wording of the code to properly reflect the actual wording of law regarding 501(C) tax-exempt status.  I also highly recommend Congress appropriate enough funds to the IRS so that it can examine the tax status of every organization that is currently avoiding its fair share of income tax.

How can an organization that pays it executive officer nearly forty-five million dollars, all the while purportedly being “primarily” in the business of providing social welfare, let alone “exclusively?”  This exemption is a travesty to the American taxpayer!

Steven H. Spring

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