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The PGA TOUR Tax-Exempt Status is Being Challenged (Again)

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Back in December of 2013, “Outside the Lines” aired a report showing how the PGA TOUR’s nonprofit business model allowed them to avoid paying as much as $200 million in federal taxes over a 20 year period. It also highlighted how many of the tournaments run by charities end up spending more on the tournament itself than what it gets in return.

In one case, a charity lost more than $4.5 million over two years.

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Outside the lines

When  “Outside the Lines” analyzed the Tour’s U.S.-based tournaments, they found they spent about 16 percent on actual charity. Charity watchdog groups say a minimum of 65 percent makes for a responsible charity.

Instead, most of the money was going to big prizes, cash payouts to athletes, and promotion.

The Tour, which didn’t argue with the 16 percent, claimed then, and still does now, that other donations aren’t possible without the big tax break, but Ken Berger, of Charity Navigator, disagrees.

“There’s no evidence that I can see that this couldn’t be just as equally done by a for-profit that pays taxes,” Berger said.

This report led to an attempt by Congress to actually pass a law, known as the PRO Sports Act, banning all professional sports for be able to claim 501(c)6 charity status. The PGA TOUR spent $500,000 on lobbying efforts to prevent the bill from passing. In comparison, the NFL spent $60,000.

Ultimately, the bill stalled. But the NFL, NBA, and MLB would all (eventually) voluntarily give up their 501(c)6 status.

But not the PGA TOUR.

Fast-forward to 2017, when yet again, a group of Senator’s set their sights on the PGA TOUR, the LPGA, and the PGA of America. This time, everyone assumed this was a done deal. But somehow, in the final draft of the bill, the provision stripping the organizations of their charity status was missing.

Many credit the efforts of Jack Nicklaus and Davis Love III for “saving” the charity status.

“It’s pretty amazing that Jack Nicklaus and Davis Love III were reaching out to their congressmen and women,” Monahan said.

But alas, the victory seems again short-lived. Because today Senators Joni Ernst (R-IA) and Angus King (I-ME) once again introduced the Properly Reducing Overexemptions for Sports Act. Or, you guessed it, the PRO Sports Act, once again.

The Senators believe passing the law would give $100 million back to the taxpayers over ten years.

I have no idea if that number is correct. Maybe it’s less, maybe it would actually be more.

But what I do know is the idea of professional sports leagues being calling themselves nonprofit organizations is ridiculous. Do they promote and contribute to charities? Absolutely.

But as Berger said five years ago and still holds true today, there is no reason they can continue to raise awareness and money while simultaneously paying into the tax system accordingly.


Cover Image via Instagram

Kris became obsessed with the game of golf after deciding to finally hang up his baseball cleats about four years ago. Still learning the game, he’s leaned on much of the on-line golf community for help and loves to return the favor whenever possible. A contributor to several golf sites in the past, Kris writes from the perspective of your average golfer. One who has a passion for the game, but also has the typical restrictions of life and budget. He can be reached on Twitter at @krismcewen.

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