House Tax Writers to Examine Sports Industry Tax Issues

The House Ways and Means Committee is scheduled to hold a hearing June 30 to examine the "rapidly evolving business of sports and the tax issues implicated by its growth and transformation."

In advance of the hearing, the Joint Committee on Taxation (JCT) released a report outlining current law and key tax considerations affecting the sports sector. Among the issues highlighted is the longstanding eligibility of certain professional sports leagues for tax-exempt status under Section 501(c)(6) of the Internal Revenue Code. The report notes that while some leagues, including the National Football League (NFL) and Major League Baseball (MLB), have voluntarily relinquished their 501(c)(6) status in recent years, other sports organizations continue to operate under the provision.

While the hearing is focused on the sports industry, it could have broader implications for the tax-exempt community. Congressional scrutiny of the business activities and revenue streams of tax-exempt organizations is not new, and lawmakers have previously explored questions about when nonprofit organizations may resemble for-profit enterprises in their operations and sources of income.

The American Society of Association Executives (ASAE) is closely monitoring the hearing and any subsequent policy discussions for potential implications affecting associations and other tax-exempt organizations.

This article was provided to OSAP by ASAE's Power of Associations and Inroads.