Tax Exemption of Athletic Associations and Universities

revenue enhancementation Exemption of Athletic crossties and UniversitiesShould Professional Athletic Associations and Private Universities be non valuateable security?Introduction/Historical BackgroundIn the unify States, the origins of the tax-free vault of heaven long predate the re in the public eye(predicate) (Arnsberger, Ludlum, Riley 125.) Without an established framework of governing, the early colonist formed m any(prenominal) charitable and other spontaneous organizations to confront a variety of issues (Arnsberger, Ludlum, Riley 125.) Now, almost three centuries after the formulation of the republic, the nontaxable field hush up plays a major role within public administration, particularly in the fulfillment of public renovations.However, in regards to some organizations within the tax- relieve empyrean, it is becoming count onmingly much delicate to understand what public part it serves. eyepatch many non-pro harmonise-making organizations argon per forming acts that are proficient to the general public, others are non. According to Edward T. Pound, a U.S. News reporter, the PGA Tour Inc. grosses swell up $180 zillion a year from their sponsorship of the mens pro golf turn of razets (Pound.) Yet, due to the PGA Tour Inc.s non-profit-making experimental condition, the corporation does non endure any federal tax on tour operations (Pound.) The National magnetic core for Charitable Statistics reports that thither is nearly 1.5 million nonprofit organizations registered within the United States as of 2013(nccs.urban.org.) The rapid gainth within the nonprofit sector does non come without its consequences. The Internal Revenue Service has conducted numerous investigations on groups wish the National Footb both League and Childrens Television florahop for violations such as, spendthrift compensation of Congressmen (Pound.) Actions bid these are leading many to question wherefore some organizations are considered for considered to be a tax-free organization. By examining the nonprofit sector from a historical perspective and possessing a basic sagacity of 501 (c) organizations, whiz can better determine for oneself whether or not trusted organizations should be tax-exempt.For one to truly understand todays flow rate nonprofit sector, it is measurable to know a brief record of the role of the tax-exempt sector within American history. First, there are two main types of voluntary organizations public serving and member serving. objet dart these two voluntary organizations effect colossal success in early colonial settlements, with hospitals and education, the tax mandate for these voluntary organizations was not developed until 1894. Furthermore, to begin with the 1950s, tax-exempt organizations could earn exempt income from both mission-related activities and commercial business activities(Arnsberger, Ludlum, Riley 127.) It was not until the Revenue Act of 1954 that the advanced tax code for voluntary organizations was established, including section 501(c) for tax exempt organizations (Arnsberger, Ludlum, Riley 127.)In order for an organization to qualify for tax-exempt status, the organization must flourish that its spirit serves the public good as opposed to insular chase (Arnsberger, Ludlum, Riley 129.) Figures show that between the 1985 and 2004 Tax Years, the private foundation segment of the tax-exempt sector experienced significant growth (Arnsberger, Ludlum, Riley 131.) From 1985 to 2004, the number of 501(c) 3 public charities in the United States nearly tripled (Arnsberger, Ludlum, Riley 130.) Now, even today, the tax-exempt sector continues to grow in size and activities, while new tax-exempt organizations continue to put out (Arnsberger, Ludlum, Riley 135.)Argument Against Tax-Exemption for Athletic Associations and some Universities The tax-exempt sector has drastically changed end-to-end the past three decades. The rapid increase in num ber of tax-exempt organizations, along with an evolving tax code, has caused for a lack in governing bodyal foil in regards to organizations. For example, the National Football League grosses over $9.5 billion dollars per year, solely was exempt from federal taxes until 2015 when the NFL voluntarily gave a room its tax-exempt status (Isidore 2015). During its meter as a nonprofit, the NFL earned more than the Y, the Red Cross, the Salvation military or Catholic Charities- nevertheless it was able to stand as one of the greatest profit-generatingmedia enterprises ever created (Watson.) In a survey conducted by Fairleigh Dickinson University, completely 13 percent of people could identify the NFL as a nonprofit (Jenkins.) While the NFL has since forfeited its tax-exempt status, there are other athletic organization who is nonprofit status is still under question. Other athletic groups like the National Hockey League, National College Athletic Association, Professional Golfers Association Tour, and the Professional Rodeo Cowboys Association are overly under fire. Senator Tom Coburn is employment for legislation that would eliminate any athletic league that grosses more than $10 million to no longer be tax-exempt under 501(c) 6. The Senator wrote, Americans are paying artificially high rates in order to subsidise special breaks for sports leagues (Coburn.)While the NFL has now voluntarily forfeited its tax-exemption, it is still serious to question why the organization was ever tax-exempt to begin with and hand the same thoughts to other groups that are still tax-exempt. Tax-exemption for multi-million dollar athletic intimacy seems obscene, especially with some groups approach towards social issues. Before voluntarily plentiful up their tax-exempt status, U.S. Sen. Maria Cantwell proposed legislation calling to revoke the NFLs nonprofit status after the leagues failure to properly address issues of domestic abandonand the response to the Washingto n teams refusal to change its nickname (Mandell, Scott.) Cantwell stated, American taxpayers should not be forced to subsidize a $9 billion league that promotes a dictionary-defined racial slur (Mandell, Scott.) Many wonder how these athletic experiences even fit into the tax code to begin with. According to USA TODAY Sports brent Schrotenboer, the NFL has been tax-exempt since the 1940s. In 1966, Congress amended the law to list sea captain football leagues as a 501 (c) 6 organization in buffetchange for monetary pledges and the promise to build a New Orleans prerogative (Mandell, Scott). While the NFL is an easy organization to examine, the same thought can be applied to most other lord athletic associations that are also exempt from taxes.Yet, athletic associations are not the only group in question for its tax-exempt status. It has long been an understanding that educational institutions are exempt of federal income tax, but some are beginning to question if that should continuously be the case. In the summer of 2013, residents of Princeton came together to sue the prestigious university that resides in their town (Pierson, Riley). The town residents argued that the condition, Princeton University, should no longer be entitled to its tax-exempt status due to its endowment, scientific patents, events, and more (Pierson, Riley). The Ivy League instill is operating like a business, the plaintiffs say, so the tax code should address it like one (Pierson, Riley). The lawsuit claims that in 2011, the university took in over $cxv million from scientific patents, which it then put $35 million in the hands of varying faculty members. The residents lawyer said, People in Princeton pay at least one-third more in taxes because the university has been exempt all these years (Pierson, Riley). Princeton is not the only university experiencing backlash from its topical anaesthetic community. The mayor of Providence, Rhode Island, plateful to Brown University, also wants to increase the universitys tax payments. At a rack conference, Mayor Angel Tarveras said, It throngs the revenue collected from 19,00 taxpayers to account for the $38 million in property taxes not paid by Brown University (Pierson, Riley.)Yet, as communities continue to struggle to fund public swear outs, some find it difficult to understand why prosperous schools and universities are tax-exempt. In 2004 alone, educational institutions held sixsome of the top ten positions for public charities within the United States (Arnsberger, Ludlum, Riley 131.) Yet, many of these well-off educational institutions do critical to financially support the local community, even though the schools benefit from many of its local public services (Pierson, Riley.) virtually universities like John Hopkins, Yale, and Duke have worked out pilot deals in lieu of paying taxes (Pierson, Riley.) But even these donations fall well below what the school would owe in taxes (Pierson, Riley.)C ounter Argument for Athletic Assoc. and Universities and their Tax-Exemption According to Judith Long, prof of sports management at the University of Michigan, the tax-exempt status of athletic associations is irrelevant (Long 2014). The government does not stand to gain significant financial revenue by revoking the tax-exempt status of athletic associations. Much of the furor in the current debate over the nonprofit status of professional sports is driven by misplaced perceptions that the revenues earned by these organizations are not taxed (Long 2014). The large salaries of accomplice executives are still taxed later through individual taxes, as well as many of the major league teams who are apart of the association (Long 2014). In addition, Long notes that, many nonprofit sports leagues and associations operate either at a deficit or just about break-even, leaving little or no income tax(2014). Thus, revoking the tax-exempt status of professional athletic associations would not yield as much revenue as one would think. centre on the tax-exempt status of professional athletic associations masks many of the solid burdens these groups place on the American taxpayer. For example, we continue to permit the use of federal tax-exempt bonds to fund new stadiums and arenas, and cities across America routinely select relief from property taxes for pro-facilities (Long 2014). Where the revenue the government stands to gain from revoking the tax-exempt status of professional associations stands to be around $110 million within the prime(prenominal) decade, these grants relief from property taxes has cost to be in the billions over the know decade (Long 2014). Therefore, the tax-exempt status of professional athletic associations is not the biggest way in which the government is losing revenue from these groups.Evaluating the tax-exempt status of private universities is varied than examining that of professional athletic associations. Colleges and universities pr ovide value to students and society. We generate direct scotch activity from capital investments, ongoing operations, and student and visitor spending. We provide heathen opportunities to residents and support community initiatives and volunteer work (Kaplan 2015). While universities may not pay property taxes, some of them participate in payment in lieu of taxes (PILOT) programs (Kaplan 2015). According to a study conducted by the Lincoln prove of Land Policy in 2011, the PILOTs collectively across the United States were expenditure over $92 million with most of the money coming from colleges and universities (Kaplan 2015). While universities may not be paying property tax, they are a mission-based organization thats purpose is to provide a great benefit to society. inspection of Both ArgumentsLike any good topic, theres al slipway two ways to sides to the argument. Here, one is presented with the issue of whether or not professional athletic associations and private universiti es should be receiving tax-exempt status. To me, comparing the tax-exempt status of professional athletic associations to private universities is like comparing apples to oranges. I look at the argument for memory private universities is far superior to counter argument. While private universities like Brown and Princeton have significant funds and endowments that could be taxed to benefit the local community, universities provide so much value to a city. For example, communities benefit, some more than others, in tourism revenue just by de misunderstanding of having a college in their town. In addition, like previously said in the counter argument, universities benefit the community through volunteerism and threw many on-campus organizations. In addition, I debate that higher education universe tax-exempt allows the government to take an all-important(prenominal) stance. The cost of education is too for most students and families, making many students take out loans just to pa y for school. By having education be tax-exempt, I believe that the government is sending a message that education provides a great service and benefit to us all.While I believe in private educations tax-exempt status and the message it sends, I do not believe that professional athletic associations like the NHL and PGA should be tax-exempt. While a strong counter can be found as the why the tax-exempt status of these organizations is irrelevant, I still feel that it sends the haywire message and is unfair to the American taxpayer. The PGA grosses nearly $180 million a year in sponsorship, yet they are tax-exempt (Pound). To me, that is almost degraded of the government to do. Non-profits are meant to be mission-serving organizations that provide a beneficial service to their community however, I see no benefit to the community by these organizations tax-exempt status. With the national debt continuing to rise, one would think the government would be taking any rightful cent they could get. Athletic leagues and some universities are just two examples of nonprofits that can be seen as questionable by the American people. In addition, I think it is important for the government to be transparent and really take into consideration the mission of the organization before verifying a group as tax-exempt. Keeping valuable tax dollars from the government and the American people is unfair, especially when it comes to athletic organizations that earn billions of dollars a year. With people struggling to simply pay for daily necessities, it is time for the government to reevaluate the current tax codes, and allow for more government transparenceConclusionTo conclude, after presenting a basic history of nonprofit organizations and its tax codes, one can better determine whether or not particular groups should be considered a tax-exempt organization in todays society. As history has elevateed, it is becoming seemingly more difficult to see what public purpose certain gr oups are serving. The NHL and the PGA Tour Inc., for example, are making millions of dollars a year, yet they pay no federal income tax on its revenue. Congressmen see the fault in the tax-exempt status of these athletic organizations, but no progress is being made. muchover, this shows a lack of transparency within in government, with a study finding of nearly 87% people being unconscious of the NFLs tax-exempt status. Yet, athletic organizations are not the only group being scrutinized for its nonprofit status. Educational institutions are beginning to feel the backlash as well. Schools such as Princeton and Brown are coming under hale by their communities to pay property tax. The reason they dont dates back to 1917 when educational institutionsoperated on a far more modest scale (Piereson and Riley.)Sometimes, it is difficult to see the public purpose of certain organizations within the tax-exempt sector. While there are countless nonprofits performing beneficial public servic es, others can be harder to justify. In the future, I believe the government should not be allowing professional athletic associations to be tax-exempt. While the potential revenue increase is modest, it is still helping taxpayers. However, when it comes to the tax exemption of private universities, I am nonsubjective or even in support of their status. Educational institutions bring great value to community, and I believe they provide a great service to the American people. Non-profits provide a great service to our country and in aiding public administrators. Thus, we should not take the status of the tax-exempt sector lightly.Works CitedUS nonprofit Sector. National Center for Charitable Statistics/US not-for-profit Sector.Arnsberger, P., Ludlum, M., Riley, M., and Stranton, M. A History of the Tax-Exempt Sector An SOI Perspective The Nature of the nonprofit organization Sector. Ed. J. Steven Ott and Lisa A. Dicke. 125-135.Coburn, T. The NFL Doesnt Need Tax-Exempt Status. US N ews. U.S. News World Report, 30 Nov. 2013.Hopkins, B., Gross, V. The levelheaded Framework of the Nonprofit Sector in the United States The Jossey-Bass Handbook of Nonprofit Leadership and Management. San Francisco Jossey-Bass. 43-52.Isidore, C. NFL gives up tax exempt status. CNN Money. 28 April 2015Jenkins, K. Your Tax Dollars into NFL Owners Pockets? PublicMind Polling, mart Analysis. Fairleigh Dickinson University, 24 Jan. 2014Kaplan, S. Losing tax exemptions would chill higher ed. The University Business. 23 September 2013.Long, J. conclusion Sports Leagues Tax-Exempt Status Might Not Bring In More Money. New York Times. 3 September 2014.Mandell, N. and Scott, N. Why the NFL Probably Wont ache Its Tax-Exempt Status. USA Today. USA Today, 23 Sept. 2014Piereson, J. and Riley, NS.,Why Shouldnt Princeton Pay Taxes? WSJ. Wall route Journal, 19 Aug. 2013Pound, ET., and Cohen, G. Tax Exempt (Cover Story).U.S. News World Report 119.13 (1995) 36. faculty member Search Premier.Wa tson, T. The Real Super Bowl Question Should the NFL be a Nonprofit? Forbes. Forbes Magazine, 30 Jan.2014