Tax Exemption Case Study

The NFL, as a “professional football league,” is listed under the code section §501(c)(6) statute, in the same class as business leagues. The forerunner to code section §501(c)(6) “business leagues” was enacted as part of the Tariff Act of 1913. It’s assumed the U.S. Chamber of Commerce request for an exemption for nonprofit civic and commercial organizations from this passage. There were only seven hundred and fifty business leagues when the code section §501(c)(6) exemption was first enacted as part of the Tariff Act of 1913 with collective revenues of $60 million. By 1995, that number had increased to more than twenty-five thousand business leagues and collective revenues of $19.5 billion. Providing tax exemption status to companies generating
Some may doubt that a tax exemption is approved solely for the economic benefit of an organization, to pick and choose when to use the exemption in a way that is beneficial to its activities. This seems exactly what the NFL has done with their tax exemption status. It is casting aside the requirement of disclosing its financial information to the public and is looking out for its own self-interest. The Commissioner Roger Goodell even stated that the NFL decided to forgo its exemption because it was a public relations headache. With Commissioner Goodell disclosure of $44 million-dollar salary, the NFL has been scrutinized for years for its tax exemption status and this disclosure will not be required by the NFL once they are a taxable entity. An important issue to those commenting on the NFL’s tax exemption are failing to discuss is the likelihood that the League could use the money it saves from being tax-exempt and to reinvest that money back into the organization, or to use it for other non-tax purposes. Since the NFL was not required to pay income taxes, they were able to get a head start on other sports leagues that were required to pay income taxes. The NFL is now playing the system and foregoing the exemption and its requirements; because the NFL no longer wishes to be tax-exempt to survive. It is estimated that the NFL had tax
First, in 1942 when struggling financially, after receiving the exemption, the NFL would have been able to build and expand the organization using money that it would have spent on taxes. Either through acquisition from a rival league, or through expansion on its own, the NFL has admitted twenty-seven different teams and franchises since 1942. Not all of these franchises are still in the league currently, but this figure supports the fact the NFL has indeed been able to grow since 1942. The NFL has decided that it no longer wants to abide by the requirements or deal with the public relations headache that comes along with being tax-exempt after seventy-three years. This should not be how the tax exemption status should work. An exemption is granted because the organization is providing a public good; a good that society does not provide for itself. An exemption is not granted merely to help an organization survive economically challenging times and then be cast aside when the exemption is no longer beneficial. Some critics may argue that there is nothing wrong with the decision the NFL wants to start paying income taxes. The NFL complied by the rules during its time of being exempt and it will now be paying income taxes for it has voluntarily given up the exemption. The point that is missed is that the League may not have survived if it was not granted the exemption. It has been stated the NFL was