Monday, August 11, 2008

Tax-Exempt Superbowl: IRS vs. The NFL

Imagine this match-up: The IRS versus The NFL.  Who will win?  I guess we shall find out before this year is over...

The New York Times reports that the two parties are now locked in battle, not on the football field, but in the halls of Congress (and ultimately, in the court of public opinion).

For years, the NFL, like any other nonprofit organization, has used IRS Form 990 to disclose names and salaries of "key employees."  The NFL has consistently maintained that only one of its employees -- the NFL Commissioner -- fits the definition of "key employee."

However, in recent years the IRS has proposed new rules to require most of the more than 1.6 million nonprofit organizations in the country to disclose much more information, including salaries of many more key employees. The rules go into effect this year.  The NFL is resisting.

According to the Times report, the football league is asking Congress for an exception to the requirement of publicly disclosing the names and salaries of employees at NFL headquarters who make more than $150,000 a year.  The NFL is arguing that it is not a charity that receives public donations.  Rather, it argues, it is a trade association financed by the teams that make up the league.  The owners of these teams, the league argues, can ask for salary information at any time.  But the general public?  Joe Browne, the NFL's executive vice president for communications and public affairs, says no public purpose can be served disclosing more trade-group salaries.

On the other side of the playing-field (well, battlefield, if you prefer that term), the IRS and some outside experts on nonprofit law say there is indeed a public interest in disclosing top salaries for all tax-exempt groups: to assure that these salaries are not excessive.

At least one referee is not impressed with the NFL's arguments.  The Times reports that:

Senator Chuck Grassley, Republican of Iowa, who is considered a nonprofit expert on the Senate Finance Committee, said all organizations that benefit from tax-exempt status should provide the same public information of their finances.

“Disclosure helps keep everyone honest,” Grassley said in a written statement. “If, as requested, professional associations like the NFL are allowed to keep salary information from the public, other tax-exempt groups would ask for the same treatment. This would be contrary to the goal of increasing transparency and accountability from tax-exempt organizations to the public.”

We wait to see who'll win this battle.


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