NFL gives up Tax Exempt Status

[Rob0729]

NFL gives up Tax Exempt Status


The NFL has announced they are giving up their tax exempt status. Too bad Senator Comcast has passed away. He could no longer threaten to do Congressional hearing every time his team or his biggest supporter were upset with the League.

 

[ctpatsfan77]

The NFL has announced they are giving up their tax exempt status. Too bad Senator Comcast has passed away. He could no longer threaten to do Congressional hearing every time his team or his biggest supporter were upset with the League.

The tax-exempt status isn't important. One thing it currently accomplishes, though, is that it means they no longer have to disclose Goodell's salary.

What's important is the anti-trust exemption (without which you can't have things like a draft).

 

[Rob0729]

The tax-exempt status isn't important. One thing it currently accomplishes, though, is that it means they no longer have to disclose Goodell's salary.

What's important is the anti-trust exemption (without which you can't have things like a draft).

Yeah, what am I thinking. Why did I confuse the two? My bad. Busy day and trying to do 18 things including spending time on this board when I should be working.

 

[PP2]

Only giving it up because they've figured out or have been given a loophole to avoid paying any tax, along with other major corporations that not only don't pay tax, but actually receive federal subsidies.

 

[Ring 6]

Only giving it up because they've figured out or have been given a loophole to avoid paying any tax, along with other major corporations that not only don't pay tax, but actually receive federal subsidies.

The NFL doesn't avoid paying tax. The league has no profit to pay tax on because all profits are made at the team level, and the teams pay tax on them.
The idea that the NFL benefits from being not for profit is thoroughly misunderstood.

 

[primetime]

Only giving it up because they've figured out or have been given a loophole to avoid paying any tax, along with other major corporations that not only don't pay tax, but actually receive federal subsidies.

Individual franchises get plenty of public tax breaks and subsidies, which for all intents and purposes are the same (and these include cash subsidies for stadiums or backdoor subsidies like maintaining infrastructure and paying police overtime for sporting events), but - as Andy said - they're the vehicles through which tax is collected, not the league office.

The league office is basically just maintained by ownership as a way to pool funds to hire staff for administration (such as the commissioner, whose income is taxed) and negotiation of league-wide contracts. The NFL league office losing tax-exempt status was always sort of tilting at windmills from people who don't understand how the business is structured.

 

[primetime]

This article in Vox sums up the deal: http://www.vox.com/2015/4/28/8509767/nfl-tax-exempt-nonprofit

In 2013, Oklahoma senator Tom Coburn introduced a bill that would have stripped the NFL of its tax-exempt status. It didn't succeed, but it's been followed by similar efforts in the House. And other lawmakers have used the tax-exempt status as a point of leverage in investigating the NFL's mishandling of concussions, among other issues.

Apparently, NFL commissioner Roger Goodell and team owners decided that its tax-exempt status was no longer worth it. In a Tuesday letter to Congress, he called the issue a "distraction" and said that in March, the 32 team owners had voted to shed the league's tax-exempt status.

This will cost them a bit of money: about $10 million or so per year. But at the same time, total revenues for all teams have risen to nearly $10 billion (because all but one of those teams are privately held, they don't have to publish their operating expenses and income). The teams pay a great deal in taxes, but the new taxes to be paid by the league offices are negligible.

In exchange, the NFL will get a few big benefits. For one, lawmakers can no longer hold the league's the tax-exempt status of it during hearings about unrelated issues. And it pre-empts a possible future move by Congress to strip the league of this status, which would have looked much worse to the public.

But more importantly, filing as a taxable, privately-held entity will mean that the NFL no longer has to disclose its income — or the oft-criticized salary of its commissioner, Goodell. As Andrew Brandt, an ESPN business analyst, told Bloomberg, "it seems like Congress has been making a big deal out of it. Without this status there’s no requirement to disclose, which helps in the PR battle."

 

[Ring 6]

Only giving it up because they've figured out or have been given a loophole to avoid paying any tax, along with other major corporations that not only don't pay tax, but actually receive federal subsidies.

Corporations are made up of both the entity and the owners (shareholders). If the corporation makes a profit and passes it all on to the shareholders, the corporation pays no tax because the shareholders pay it.
A corporation that is paying no tax because it made no profit AND distributed none to the shareholders to be taxed on, would be a corporation that is failing, and losing money, so like any other entity if it loses money, it wouldn't have anything to tax.
The issue with corporations and taxes is actually when they spend money unnecessarily that is a tax deduction. That doesn't actually hurt the IRS though, it hurts the shareholders, because otherwise it would have been distributed to them. When XYZ corp gets a box at Gillette, and is able to write it off, it isn't hurting the IRS, it is either hurting its shareholders, or (as the execs would tell you) helping the shareholders because they generate more revenue by the deals they make in the box than the box costs.

 

[The Brandon Five]

Corporations are made up of both the entity and the owners (shareholders). If the corporation makes a profit and passes it all on to the shareholders, the corporation pays no tax because the shareholders pay it.
A corporation that is paying no tax because it made no profit AND distributed none to the shareholders to be taxed on, would be a corporation that is failing, and losing money, so like any other entity if it loses money, it wouldn't have anything to tax.
The issue with corporations and taxes is actually when they spend money unnecessarily that is a tax deduction. That doesn't actually hurt the IRS though, it hurts the shareholders, because otherwise it would have been distributed to them. When XYZ corp gets a box at Gillette, and is able to write it off, it isn't hurting the IRS, it is either hurting its shareholders, or (as the execs would tell you) helping the shareholders because they generate more revenue by the deals they make in the box than the box costs.

Currently dividends are double-taxed, so I don't think the fact that they distributed profits to shareholders saves them from paying corporate tax.

 

[primetime]

If the corporation makes a profit and passes it all on to the shareholders, the corporation pays no tax because the shareholders pay it.

The corporation would still pay taxes there. Dividends are double-taxed. They're taxed as profits and then taxed when they're distributed to the shareholder, albeit at the (reduced) capital gains rate rather than the wage rate.

 

[QuantumMechanic]

The corporation would still pay taxes there. Dividends are double-taxed. They're taxed as profits and then taxed when they're distributed to the shareholder, albeit at the (reduced) capital gains rate rather than the wage rate.

Depends on the specific nature of the corporation. What you say is true of C-corps. It is not true of S-corps, where there is no double-taxation.

 

[PP2]

Corporations are made up of both the entity and the owners (shareholders). If the corporation makes a profit and passes it all on to the shareholders, the corporation pays no tax because the shareholders pay it.
A corporation that is paying no tax because it made no profit AND distributed none to the shareholders to be taxed on, would be a corporation that is failing, and losing money, so like any other entity if it loses money, it wouldn't have anything to tax.
The issue with corporations and taxes is actually when they spend money unnecessarily that is a tax deduction. That doesn't actually hurt the IRS though, it hurts the shareholders, because otherwise it would have been distributed to them. When XYZ corp gets a box at Gillette, and is able to write it off, it isn't hurting the IRS, it is either hurting its shareholders, or (as the execs would tell you) helping the shareholders because they generate more revenue by the deals they make in the box than the box costs.

Example:

http://www.nytimes.com/2012/04/29/b...x-states-and-nations.html?pagewanted=all&_r=1

 

[PP2]

The NFL doesn't avoid paying tax. The league has no profit to pay tax on because all profits are made at the team level, and the teams pay tax on them.
The idea that the NFL benefits from being not for profit is thoroughly misunderstood.

The NFL does, in fact, have taxable income.

 

[BSR]

The NFL does, in fact, have taxable income.

They do but it isn't much. The vast majority of their income is already taxed at the team level.

 

[kennyb]

The NFL's income is in effect distributed to teams. The teams pay tax. There is no double taxation with or without the status. If there were why would they give it up?

The nfl would have basically no income which is why they're giving up the tax exempt status.

 

[PP2]

They do but it isn't much. The vast majority of their income is already taxed at the team level.

http://www.forbes.com/sites/kurtbadenhausen/2011/12/14/the-nfl-signs-tv-deals-worth-26-billion/

Don't know about you but I don't exactly think that $27 billion (or $3b a year) "isn't much."

And that's just the TV rights.

 

[QuantumMechanic]

http://www.forbes.com/sites/kurtbadenhausen/2011/12/14/the-nfl-signs-tv-deals-worth-26-billion/

Don't know about you but I don't exactly think that $27 billion (or $3b a year) "isn't much."

And that's just the TV rights.

And virtually none of that says within the NFL "umbrella". The vast majority goes to the 32 teams.
That's why this change of status will cost the NFL very little.

 

[Ring 6]

The NFL does, in fact, have taxable income.

http://www.forbes.com/sites/kurtbadenhausen/2011/12/14/the-nfl-signs-tv-deals-worth-26-billion/

Don't know about you but I don't exactly think that $27 billion (or $3b a year) "isn't much."

And that's just the TV rights.

That money passes to the teams who pay tax on it.

 

[QuantumMechanic]

From a Time article:

"The league office is tax-exempt, but it generated just $9 million in income during the 2012 tax year."

http://time.com/3839164/nfl-tax-exempt-status/

And this LA Times article has more details:

http://www.latimes.com/business/hil...ropping-its-taxexemption-20150428-column.html

 

[PP2]

And virtually none of that says within the NFL "umbrella". The vast majority goes to the 32 teams.
That's why this change of status will cost the NFL very little.

The NFL's loan program, the infamous "G4" program has lend out hundreds of millions of dollars to fund stadiums around the NFL. It, for instance, lent out $300 million for the construction of the joint Jets/ Giants stadium, $150 million for the Dallas and Indianapolis stadiums.

Where did the money origin?