NFL Ends Tax-Exempt Status

Hoya81

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http://www.bloomberg.com/politics/articles/2015-04-28/nfl-will-end-its-tax-exempt-status-goodell-tells-team-owners
"The National Football League’s central office will become a taxable entity, ending its tax-exempt status in a move with minimal financial effect and significant symbolic value.

Commissioner Roger Goodell informed team owners and members of Congress of the decision in letters dated Tuesday, saying he was eliminating a “distraction.”

“Every dollar of income generated through television rights fees, licensing agreements, sponsorships, ticket sales, and other means is earned by the 32 clubs and is taxable there,” Goodell wrote. “This will remain the case even when the league office and Management Council file returns as taxable entities, and the change in filing status will make no material difference to our business.”

Interesting that one of the results from this is that Goodell's salary will no longer be a public record.
 

krobe

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Because they didn't understand the situation. "the nfl is exempt from paying taxes" sounds really bad until you find out most pf the money flows through the teams which do have to pay taxes.
 

RG33

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ifmanis5 said:
If it's a "minimal financial effect" then why were people making a big deal out of it?
Because people are stupid.

It's purely a PR move, but the conspiracy theorists will come up with some lurid reason for it.
 

pappymojo

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Does this in any way minimize the likelihood that the government would hold congressional hearings for some future scandal a la the Mitchell report? 
 

epraz

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It will have a significant personal impact for Roger Goodell, since his comp will no longer be available through 990s.
 

Devizier

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epraz said:
It will have a significant personal impact for Roger Goodell, since his comp will no longer be available through 990s.
 
I'm assuming this is the precursor to a payraise?
 

Otis Foster

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pappymojo said:
Does this in any way minimize the likelihood that the government would hold congressional hearings for some future scandal a la the Mitchell report? 
 
Well in theory Congressional hearings have to be conducted with respect to an issue that may warrant specific statutory remediation, but we all know how that plays out.
 

RhaegarTharen

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pappymojo said:
Does this in any way minimize the likelihood that the government would hold congressional hearings for some future scandal a la the Mitchell report? 
 
I think this is primarily about getting ahead of any negative optics related to the Tax-Exempt status.  Things like the Concussion Settlement and the organizations poor record with player fines etc gain significantly more bad press when paired with the notion of the League as a TE organization.  Regardless of the actual facts (that the income is taxable at the team level) it certainly does not help paint the League in a favorable light. 
 

epraz

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Even if most of the income's getting passed through to the for-profit teams, there are lots of other tax benefits to being a 501(c), and it was always a bit unseemly to have the NFL as a 501(c)(6).  Here's a list of the types of entities that can be 501(c)(6), per the IRS:
  • Business leagues
  • Chambers of commerce
  • Real estate boards
  • Boards of trade
  • Professional football leagues
:blink:
 
M

MentalDisabldLst

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Savvy PR and business move by Goodell.
 
There, I said it.
 

glennhoffmania

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krobe said:
Because they didn't understand the situation. "the nfl is exempt from paying taxes" sounds really bad until you find out most pf the money flows through the teams which do have to pay taxes.
 
Well most of it does, but it's not like the NFL wouldn't otherwise owe tax:
 
But Congress’s Joint Committee on Taxation pegged the amount at just $109 million over the next 10 years.
 
 
$10 million per year isn't a large amount in the context of the league as a whole, but it's unfair to say that people don't understand the situation when they've still saved a shitload of money in taxes over the years.
 

TomTerrific

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On Marketplace last night some reporter from Bloomberg mentioned that a side effect of this change is that it will hide the salary information of Goodell and a small set of the highest executives in the League Office. As a tax-exempt entity they're forced to reveal this information in their filings, but no longer.

nm, I'm an idiot, already mentioned above by epraz
 

RG33

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glennhoffmania said:
Well most of it does, but it's not like the NFL wouldn't otherwise owe tax:
 

 
$10 million per year isn't a large amount in the context of the league as a whole, but it's unfair to say that people don't understand the situation when they've still saved a shitload of money in taxes over the years.
The $10 million per year average was for both the NFL and NHL combined per the article.

Either way, this is more about PR and removing the "the NFL makes billions and doesn't pay taxes" than anything else IMO.
 

glennhoffmania

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From the NFL's perspective of course it's a PR move.  How else would they benefit from paying millions of dollars in taxes going forward?  My only point was that in reality people who have questioned it actually do have an economic point as well because it's not like the NFL doesn't have income that would otherwise be taxable.
 
Re: the $10m in savings, you're right about the article I linked so that's my bad.  I read somewhere else that it was $10m for the NFL alone.  I don't know which is correct but either way it's in the millions per year for the NFL.
 

mauf

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If the CBO's estimate of the NFL's tax savings is the over/under, I'll take the under. The NFL will structure its affairs differently going forward so that less revenue flows through the now-taxable entity.