Should the NFL be tax-exempt? - FOX 13 News

Should the NFL be tax-exempt?

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TAMPA (FOX 13) -

You know the NFL will rake in a fortune from Sunday's Super Bowl. But you may not know the league is exempt from federal taxes on earnings.

Government watchdogs claim professional sports leagues are using a special loophole to avoid paying taxes, and it's costing all of us.

The IRS decided the National Football League should be tax exempt. It ruled the National Football League is a non-profit because it is a professional league.

Nearly 50 years ago, Congress changed the IRS code, granting non-profit status specifically to "professional football leagues." The NFL has claimed it ever since. The National Hockey League, the Professional Golfers Association and other leagues said they should get the same exemption -- and the IRS agreed.

Oklahoma senator Tom Coburn estimated this tax-exemption for professional sports leagues is costing taxpayers more than $90 million a year.

But we discovered many of our congressmen don't even know about it.

"Well it doesn't sound good," said Florida senator Marco Rubio. "That's one I'm not deeply familiar with but, maybe there's a good justification for it. I can't think of one right off hand."

Weeks ago, we asked senator Rubio, Senator Bill Nelson and all of our Tampa Bay area congressmen if they think pro-sports leagues should be tax exempt.

Only representative C.W. Bill Young responded. He said Congress should consider closing the exemption as part of a broader review of the tax system. But Congress has taken no action.

"It's almost to point I can only laugh," said Chidi Ahanotu, a former a defensive end that the Tampa Bay Buccaneers once named as its franchise player. "One of the reasons why they were able to get those designations in the beginning was because of their power."

According to numbers released from Coburn's office, the NFL generates around $9 billion a year. In 2010, Commissioner Roger Goodell made $11.6 million in salary and perks.

Five other league managers made a total of more than $19 million.

The teams and players pay taxes, but the federal tax exemption means the league itself operates largely tax-free.

"It's a slap in the face and I hope it's something that's changed," Ahanotu said.

Taxes are up, the federal debt is going up, and money for small non-profits is going down.

Just ask Kim Dohrman with Creative Clay in St. Petersburg, where they help disabled students develop life skills through art.

"Well, we've had to do a lot of cuts," she said. "With the economy being tighter than ever, people are holding onto their purse-strings. I would say non-profits should be doing work that serves the community."

The baseball players at the Kids & Kubs league in St. Petersburg are also raising their eyebrows. The IRS just yanked its non-profit status, because of a paperwork glitch. Now, the small, amateur league for senior citizens faces big tax bills.

"Lobbyists and people in Washington DC set that up. It hurts all of us, especially the working people," said Jimmy Craver.

The NFL says it's also serving the community by promoting football -- and again, the IRS agrees.

We asked if the NFL has ever been through an IRS audit. The league has not yet responded.

We also asked Kim at Creative Clay when was the last time they were audited.

"Well, we're being audited right now," she said.

*****

Here is the statement the NFL sent us:

"The NFL League Office is a not-for-profit organization. The NFL League Office receives funding from the 32 member clubs to cover its non revenue overhead activities such as office rent, League Office salaries and game officiating. In addition, the NFL League Office collects revenues on behalf of the 32 member clubs and distributes those revenues to the clubs. All national revenues (e.g. broadcast TV payments) collected and paid to the member clubs, as well as local revenues earned individually by the clubs, are subject to tax at the club level. This structure is not unlike that of any partnership where the net earnings of the partnership are passed through to the partners where it is taxed."

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