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The National Football League’s Tax-Exempt Status Faces Scrutiny from Dissenters

BY: Robert Baldwin III February could not come any quicker for the NFL. While fans prepare for the most anticipated sporting event of the year, the NFL desperately awaits the first moment it can place its most scandalous season in history in the rearview. However, domestic violence and child abuse has become only a portion of its ills and a long vacation from work will not cure it. In addition to the recent bad press the league has seen, the NFL’s tax exempt status is constantly being challenged. There is a bit of a history behind it. The National Football League was granted nonprofit status in 1942 when the IRS ruled that it was a trade association for its member teams. This ruling qualified the league for federal tax exemption. Decades later in 1966, The NFL was set to merge with its biggest competitor, the American Football League. The merger risked antitrust ramifications, so to be safe, thenNFL Commissioner Pete Rozelle sought out the assistance of Senate Finance Committee Chairman Russell Long. Long crafted favorable language to the pending tax bill. In exchange, Long bargained that his hometown of New Orleans would receive the NFL’s next expansion team. The New Orleans Saints was born from that agreement and in exchange, the NFL got an amended IRS code (§ 501 (c) (6)) that exempts: business leagues, chambers of commerce, real estate boards, boards of trade and professional football leagues, which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual. Essentially, the NFL is classified as a trade association by furthering the purpose of the industry it represents. The industry in question, professional football, is furthered by the NFL’s hand in youth development, contributions to research on concussions and other issues, and the organizing of its 32 members (teams). This tends to offend most—the thought that a $10 billion a year corporation evades federal taxes like a scurrying kitchen roach at the flick of the light. While some fans have started change.org petitions, lawmakers have used their

position in an attempt to strip the NFL of this this exemption. Recently, there have been three bills introduced to force the NFL to pay up to Uncle Sam.

Recent Legislative Action The most recent attack on the exemption came in the form of a bill introduced Sept. 18 by Sens. Maria Cantwell (DWash.), Harry Reid, (D-Nev.) and Tim Johnson (D-S.D.), by introducing a bill to revoke the tax exemption from any professional sports league that promotes the use of the term “redskin.” This proposal forces the NFL, which has been publicly supportive of the team’s ability to retain the name, to pressure Redskins owner Dan Snyder into changing it. “It is not right that the National Football League continues to denigrate an entire population,” Reid, then Senate majority leader, said in a statement. “Today we are taking action and I gladly stand with Senator [Maria] Cantwell in calling for the end of NFL’s not-for-profit status.” Cantwell announced the proposal in a Capitol Hill press conference surrounded by Native Americans, including the National Congress of American Indians and the Oneida Indian Nation. The proposal is just the latest action taken against the name of the Washington team. In 2013, the US Patent and Trademark Office revoked the team’s six trademarks citing that “Redskins” was disparaging to a “substantial composite of Native Americans.” Around the time of Senator Cantwell’s proposal, New Jersey Sen. Cory Booker (D) introduced legislation that would rescind “decades-old tax loophole used by professional sporting leagues.” In what is seemingly a response to the well-documented mishandling of recent domestic violence cases by the NFL, Booker wanted to use the money generated to help fund domestic violence prevention programs. In a statement, Booker argued that “[s]topping domestic violence is a national priority that requires long-term, meaningful investment. This commonsense update to our tax laws would save more than $100 million over 10 years – money that can instead be used to pay for vital support programs that have seen their funding slashed in recent years due to sequestration and gridlock.” Oklahoma Sen. Tom Coburn (R) introduced a bill in 2013

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