House Oversight Head to Sports Leagues: Explain Your Tax Status

Rep. Jason Chaffetz, the leading congressional critic of major sports leagues' tax-exempt status, has asked 10 professional sports leagues to provide information on their 501(c)(6) tax-exempt status—starting with the NFL.

Some in Washington have thrown a red flag on the NFL for its tax-exempt status as a trade association. Now a leading House member is asking the NFL to defend that special tax treatment.

Rep. Jason Chaffetz (R-UT), the head of the House Oversight and Government Reform Committee who in late January introduced a bill that would eliminate nonprofit status for pro sports leagues with revenues above $10 million, sent letters Wednesday to 10 of the leagues asking for information “to assist the committee in evaluating the impact of this [proposed] exemption.” Letters were sent to the NFL, NHL, and PGA, among others.

Chaffetz had previously pledged to scrutinize the NFL, which has its 501(c)(6) nonprofit tax status literally written into the federal tax code.

Also signed by ranking committee member Rep. Elijah Cummings (D-MD), the committee’s letter to NFL Commissioner Roger Goodell states [PDF]: “If not for the 1966 classification for professional football leagues and subsequent IRS interpretation, professional sports leagues would not be eligible for tax exempt status under 501(c)(6) because they do not meet the traditional definition of a trade association.”

The 1966 classification was added, according to Reuters, to assist the NFL in its merger with the American Football League that year.

The letter also raises a series of questions, including asking whether the NFL has considered voluntarily abandoning its tax-exempt status.

While recipients of the letter are under pressure to provide answers to the committee, two leading professional sports leagues are not: the NBA and MLB. The NBA has never been a tax-exempt organization and the MLB gave up that status in 2008, according to Reuters.

The NFL, sensing that legislative pressure was rising, recently boosted its lobbying presence in Washington by hiring a former top aide to House Majority Whip Steve Scalise (R-LA) as its top Republican lobbyist, according to The Hill.

Rep. Jason Chaffetz, the head of the House Oversight and Government Reform Committee. (personaldemocracy/Flickr)

Ernie Smith

By Ernie Smith

Ernie Smith is a senior editor for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. MORE

Got an article tip for us? Contact us and let us know!