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What ticks me off and isn't mentioned in the article is how the U.S Government gave permission and classifies the NFL as a non-for-profit organization[1]. This

What ticks me off and isn't mentioned in the article is how the U.S Government gave permission and classifies the NFL as a non-for-profit organization[1]. This classification deters millions in taxes that any other organization of its' size would ultimately be paying. [1] http://www.nbcnews.com/business/legal-procedure-critics-cry-foul-nfl-defends-nonprofit-status-8C11412804 http://www.nbcnews.com/business/legal-procedure-critics-cry-...

amitkumar01 13y ago
They do touch on it..."It would be higher still if not for the fact that the NFL's tax-exempt status allows its employees to avoid paying any local sales taxes for their dinners or hotel stays during Super Bowl week; in New Orleans, this amounted to $800,000 in lost sales tax revenue."
- gamblor956 13y ago
  Sales tax exemptions for non-profits are state-level exemptions. States don't have to accord the NFL non-profit status for state taxes if they don't want to.
  - _delirium 13y ago
    I don't see the article arguing otherwise. The article is just arguing that states shouldn't be playing the NFL's bullshit game, not that it's the federal government's fault they are.
maxerickson 13y ago
I don't particularly care if the league keeps their non profit status or not, but they would pay taxes on recognized income, not revenue. This means that they could arrange to pay ~$0 tax by not having much income (which they probably more or less do now).
- _delirium 13y ago
  As far as income taxes that's true. However the NFL's current nonprofit status means it avoids taxes that most other entities (individuals or businesses) would have to pay even if not profitable, such as sales tax. Many (most?) states allow nonprofits to show a tax-exempt ID number at places like Wal-Mart or at hotels, and have sales, occupancy, and other taxes removed. The motivation, I believe, was to provide in effect a subsidy to the work of organizations like the Red Cross, by reducing their expenses. That can be solved at the state level, however. The states do not have to defer to the federal government's classification of 501(c) tax-exempt organizations when choosing who to exempt from state taxes. They could adopt a more stringent state-level definition. Or they could still defer to the federal categories, but a more restrictive subset. For example, a state could limit tax exemptions to 501(c)(3) charities (which have more stringent requirements), and not exempt 501(c)(6) organizations like the NFL. (Considering what kind of stuff slips into 501(c)(6), this is probably a good idea beyond just the NFL case.)
  - maratd 13y ago
    > Many (most?) states allow nonprofits to show a tax-exempt ID number at places like Wal-Mart or at hotels, and have sales, occupancy, and other taxes removed. They also allow any business to do the same, as long as whatever is purchased is sold to another party as a part of doing business. So a computer tech shop, for example, would never pay for any parts it purchases at the store that are then included in a system it sells.
    - _delirium 13y ago
      Under a VAT system, that's true across the board. But under the U.S. sales-tax system nonprofits have blanket exemption, while businesses generally don't. Services such as hotels used in business travel, for example, are generally not exempt, so the NFL would pay occupancy tax if it were not a 501(c)(6) organization (or a state chose not to recognize that exemption). And whether purchase of goods is exempt depends on the state and the specific kind of good; most provide very specific lists of exempted "machinery and equipment" that fall far short of everything. For example, here are California's rules: http://www.boe.ca.gov/sutax/faq426.htm#1 http://www.boe.ca.gov/sutax/faq426.htm#1
ozi 13y ago
Why does this tick you off? "Non-profit" doesn't mean it has to be a charity. It just means that they make no profit... All profits are divided among the teams and taxed accordingly. The money is being taxed, just not at the "top" level.
- lukeschlather 13y ago
  Non-profit also doesn't mean it has to be tax-exempt. The NFL doesn't smell to me like something that should have tax-exempt status.
  - tuxracer 13y ago
    Tax-exempt status or not only profits are taxed anyways. As ozi mentioned they send their profits to the individual teams (where it is then taxed).
    - _delirium 13y ago
      No, they avoid may other taxes via this strategy as well, such as sales taxes and hotel-occupancy taxes.
      - honksillet 13y ago
        It's not like our government wouldn't horribly squander any additional tax receipts.
- yeukhon 13y ago
  Look at this: http://www.change.org/NFLnonprofit http://www.change.org/NFLnonprofit
- 001sky 13y ago
  It just means that they make no profit LOL. They make plenty, they just funnel cash to affiliates via the cost structure. Having a non-profit status enables this shell game by eliminating economic entropy. Its 2013...this is not "news", its is standard operating procedures in many walks of life. Have you seen the television contracts for the NCAA? Oh, wait...those are just a bunch of amateurs =D The players, maybe. But not the accountants, coaches, boosters, and administrators.
tsotha 13y ago
Meh. The NFL is a nonprofit organization. I don't see the problem. The teams pay plenty of taxes.
dlp211 13y ago
This comes up all the time on reddit. The NFL makes no profit. Do not confuse the statement of the "NFL makes no profit" with "the collection of teams that make up the NFL make no profit". They are not the same thing. The NFL is paid by the teams to work for them negotiating with the NFLPA, TV contracts, etc. NFL employees are not tax exempt, and neither are the teams.
mdmarra 13y ago
The NFL is an entity which represents the interests of the teams' owners. The commissioner is appointed by the owners. It bargains collectively against the Player's Union and handles things like national television deals, officiating, and scheduling. The teams themselves are where almost all of the money is. Each one operates like an independent entity that has to follow rules set forth by the NFL. This is why they're called "franchises." The NFL does gross millions of dollars each year, but it's a tiny fraction compared to each individual team and the teams themselves do not enjoy the same tax status that the league itself has.
frogpelt 13y ago
IKEA has a similar set up in the Netherlands. http://en.wikipedia.org/wiki/IKEA#Profits http://en.wikipedia.org/wiki/IKEA#Profits

amitkumar01 13y ago

They do touch on it..."It would be higher still if not for the fact that the NFL's tax-exempt status allows its employees to avoid paying any local sales taxes for their dinners or hotel stays during Super Bowl week; in New Orleans, this amounted to $800,000 in lost sales tax revenue."

gamblor956 13y ago
Sales tax exemptions for non-profits are state-level exemptions. States don't have to accord the NFL non-profit status for state taxes if they don't want to.
- _delirium 13y ago
  I don't see the article arguing otherwise. The article is just arguing that states shouldn't be playing the NFL's bullshit game, not that it's the federal government's fault they are.

maxerickson 13y ago

I don't particularly care if the league keeps their non profit status or not, but they would pay taxes on recognized income, not revenue. This means that they could arrange to pay ~$0 tax by not having much income (which they probably more or less do now).

_delirium 13y ago
As far as income taxes that's true. However the NFL's current nonprofit status means it avoids taxes that most other entities (individuals or businesses) would have to pay even if not profitable, such as sales tax. Many (most?) states allow nonprofits to show a tax-exempt ID number at places like Wal-Mart or at hotels, and have sales, occupancy, and other taxes removed. The motivation, I believe, was to provide in effect a subsidy to the work of organizations like the Red Cross, by reducing their expenses. That can be solved at the state level, however. The states do not have to defer to the federal government's classification of 501(c) tax-exempt organizations when choosing who to exempt from state taxes. They could adopt a more stringent state-level definition. Or they could still defer to the federal categories, but a more restrictive subset. For example, a state could limit tax exemptions to 501(c)(3) charities (which have more stringent requirements), and not exempt 501(c)(6) organizations like the NFL. (Considering what kind of stuff slips into 501(c)(6), this is probably a good idea beyond just the NFL case.)
- maratd 13y ago
  > Many (most?) states allow nonprofits to show a tax-exempt ID number at places like Wal-Mart or at hotels, and have sales, occupancy, and other taxes removed. They also allow any business to do the same, as long as whatever is purchased is sold to another party as a part of doing business. So a computer tech shop, for example, would never pay for any parts it purchases at the store that are then included in a system it sells.
  - _delirium 13y ago
    Under a VAT system, that's true across the board. But under the U.S. sales-tax system nonprofits have blanket exemption, while businesses generally don't. Services such as hotels used in business travel, for example, are generally not exempt, so the NFL would pay occupancy tax if it were not a 501(c)(6) organization (or a state chose not to recognize that exemption). And whether purchase of goods is exempt depends on the state and the specific kind of good; most provide very specific lists of exempted "machinery and equipment" that fall far short of everything. For example, here are California's rules: http://www.boe.ca.gov/sutax/faq426.htm#1 http://www.boe.ca.gov/sutax/faq426.htm#1

ozi 13y ago

Why does this tick you off? "Non-profit" doesn't mean it has to be a charity. It just means that they make no profit... All profits are divided among the teams and taxed accordingly. The money is being taxed, just not at the "top" level.

lukeschlather 13y ago
Non-profit also doesn't mean it has to be tax-exempt. The NFL doesn't smell to me like something that should have tax-exempt status.
- tuxracer 13y ago
  Tax-exempt status or not only profits are taxed anyways. As ozi mentioned they send their profits to the individual teams (where it is then taxed).
  - _delirium 13y ago
    No, they avoid may other taxes via this strategy as well, such as sales taxes and hotel-occupancy taxes.
    - honksillet 13y ago
      It's not like our government wouldn't horribly squander any additional tax receipts.
yeukhon 13y ago
Look at this: http://www.change.org/NFLnonprofit http://www.change.org/NFLnonprofit
001sky 13y ago
It just means that they make no profit LOL. They make plenty, they just funnel cash to affiliates via the cost structure. Having a non-profit status enables this shell game by eliminating economic entropy. Its 2013...this is not "news", its is standard operating procedures in many walks of life. Have you seen the television contracts for the NCAA? Oh, wait...those are just a bunch of amateurs =D The players, maybe. But not the accountants, coaches, boosters, and administrators.

tsotha 13y ago

Meh. The NFL is a nonprofit organization. I don't see the problem. The teams pay plenty of taxes.

dlp211 13y ago

This comes up all the time on reddit. The NFL makes no profit. Do not confuse the statement of the "NFL makes no profit" with "the collection of teams that make up the NFL make no profit". They are not the same thing. The NFL is paid by the teams to work for them negotiating with the NFLPA, TV contracts, etc. NFL employees are not tax exempt, and neither are the teams.

mdmarra 13y ago

The NFL is an entity which represents the interests of the teams' owners. The commissioner is appointed by the owners. It bargains collectively against the Player's Union and handles things like national television deals, officiating, and scheduling. The teams themselves are where almost all of the money is. Each one operates like an independent entity that has to follow rules set forth by the NFL. This is why they're called "franchises." The NFL does gross millions of dollars each year, but it's a tiny fraction compared to each individual team and the teams themselves do not enjoy the same tax status that the league itself has.

frogpelt 13y ago

IKEA has a similar set up in the Netherlands. http://en.wikipedia.org/wiki/IKEA#Profits http://en.wikipedia.org/wiki/IKEA#Profits