NFL gives up tax exemption

NFL gives up tax exemption
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The National Football League on Tuesday decided to give up the tax-exempt status for its league office, agreeing to the demands of lawmakers who denounced it as an unconscionable giveaway.

Roger Goodell, the league’s commissioner, essentially told NFL owners in a memo that the tax incentive wasn’t worth what had become a years-long public relations hassle. But the move also offers the league new ways to shield information — including Goodell’s $44 million salary in 2012 — from public view.

In his memo, Goodell insisted that the league’s tax status has “been mischaracterized repeatedly,” noting that the government taxes income from TV rights fees, ticket sales and any other revenue generated by the 32 professional football teams.

He added that abandoning the tax exemption wouldn’t change how the NFL operates. With that in mind, both Goodell and Bob McNair, the owner of the Houston Texans, said it was past time for the league to get rid of the “distraction” caused by the tax exemption.

“The fact is that the business of the NFL has never been tax exempt,” Goodell wrote. 

For Goodell and the NFL, the tax exemption had become a ripe target without doing all that much to help the league’s bottom line.

Lawmakers, including House Oversight Committee Chairman Jason ChaffetzJason ChaffetzMatt Schlapp: Trump's policies on Russia 'two or three times tougher than anything' under Obama Tucker Carlson: Ruling class cares more about foreigners than their own people Fox's Kennedy chides Chaffetz on child migrants: 'I’m sure these mini rapists all have bombs strapped to their chests' MORE (R-Utah), former Sen. Tom CoburnThomas (Tom) Allen CoburnThe real disease: Price transparency key to saving Medicare and lowering the debt Mr. President, let markets help save Medicare Pension insolvency crisis only grows as Congress sits on its hands MORE (R-Okla.) and Sen. Angus KingAngus Stanley KingOvernight Energy: Judge revives clean water rule | Keystone XL pipeline to get new environmental review | Nominee won't say if he backs funding agency Trump nominee won't say if he supports funding agency he was selected to run Trump draws bipartisan fire over Brennan MORE (I-Maine) had all sought to end the NFL’s exemption, making the case that a sports league that made roughly $10 billion a year shouldn’t be classified like a trade association for tax purposes. 

Senate Minority Leader Harry ReidHarry Mason ReidWith lives at stake, Congress must start acting on health care GOP’s midterm strategy takes shape Battle of the billionaires drives Nevada contest MORE (D-Nev.) and Sen. Maria CantwellMaria Elaine CantwellSenators share their fascination with sharks at hearing Poll: Majority of Americans support Roe v. Wade The Hill's Morning Report — Sponsored by Better Medicare Alliance — Protests and anger: Washington in turmoil as elections near MORE (D-Wash.) previously proposed stripping the NFL of its tax exemption as long as the Washington Redskins kept their team name.

On Tuesday, lawmakers cast the NFL’s decision as a victory, though it gives them one less method for exerting pressure on the league.

“It is rewarding to see such an important and positive step toward restoring basic fairness,” Chaffetz and the Oversight panel’s top Democrat, Rep. Elijah Cummings (Md.), said in a statement. 

“We hope other professional sports organizations in similar situations will follow the positive example set by the NFL, and we look forward to rightfully returning millions of dollars to the federal treasury as a result.”

Congressional scorekeepers have projected that legislation rolling back the league’s tax exemption would raise roughly $109 million over a decade. Other major sports leagues, such as Major League Baseball and the National Basketball Association, had either surrendered or never had a tax exemption. 

The NFL had been clinging to its tax exemption at a time when lawmakers were showing interest in an array of other issues facing the league, including concussions and domestic violence accusations against several prominent players.

Under the previous setup, the IRS treated the NFL’s league office the same way it does the Chamber of Commerce and other trade associations organized as 501(c)(6) nonprofits. In his memo, Goodell said the IRS first gave the league tax-exempt status during World War II, more than seven decades ago.

The NFL’s decision leaves the National Hockey League as the only major North American sports league with a tax exemption, though various professional organizations for golf and tennis also are on the IRS’s exemption list. 

The league’s move mirrors a decision the MLB made to drop its exemption in 2007, when professional baseball was in the midst of a burgeoning controversy over performance enhancing drugs. The MLB reportedly decided its league office should pay taxes, in part, to avoid reporting certain operational details, like salaries, required of nonprofit organizations.

But lawmakers said Tuesday that they had other ways to put pressure on the NFL.

Reid said Tuesday that the tax exemption was a small issue compared to all the problems the NFL is facing, including what he called the league’s “kowtowing” to the Redskins.

“We know that they have an ongoing crisis with the head injuries,” Reid added. “So the National Football League has a lot more problems than the subsidy that they get from taxpayers.”

And Sen. Chuck GrassleyCharles (Chuck) Ernest GrassleyOvernight Health Care: Collins says Kavanaugh sees Roe v. Wade as 'settled law' | Insurers back pricing disclosure measure | Pfizer extends EpiPen expiration dates amid shortage Democratic leader gives boost to criminal justice reform compromise The Hill's Morning Report — Trump casts energy, land policies as gifts to red-state voters MORE (R-Iowa), a former chairman of the tax-writing Finance Committee, noted that the NFL still enjoys an exemption from antitrust charges thanks to Congress, which gives lawmakers a point of entry for any issues they might have with the league.

“If you’ve got any questions about the NFL, there’s a way to ask them,” he said.

Peter Schroeder contributed.