Section 1 Short title
This Act may be cited as the “Properly Reducing Overexemptions for Sports Act” or the “PRO Sports Act”.
Properly Reducing Overexemptions for Sports Act
A BILL
To amend the Internal Revenue Code of 1986 to exclude major professional sports leagues from qualifying as tax-exempt organizations.
Sec. 2 Findings
Congress makes the following findings:
The National Football League (NFL), National Hockey League (NHL), PGA Tour, and Ladies Professional Golf Association (LPGA) each have league offices that are registered with the Internal Revenue Service as non-profit organizations under section 501(c)(6) of the Internal Revenue Code of 1986.
League-wide operations of the NFL, NHL, PGA Tour, and LPGA generate an estimated $13 billion in annual revenue, and these businesses are unmistakably organized for profit and to promote their brands.
Separate from their subsidiaries, the nonprofit league offices of the NFL, NHL, PGA Tour, and LPGA had annual gross receipts of $184.3 million, $89.1 million, $1.4 billion, and $73.7 million in 2010, respectively, for a combined total of over $1.7 billion, according to each organization’s publicly available Form 990 filed with the Internal Revenue Service.
According to the Internal Revenue Service, section 501(c)(6) of the Internal Revenue Code of 1986 is for groups looking to promote a “common business interest and not to engage in a regular business of a kind ordinarily carried on for profit”.
According to the Internal Revenue Service, businesses that conduct operations for profit on a cooperative basis should not qualify for tax-exempt treatment under section 501(c)(6) of the Internal Revenue Code of 1986.
Sec. 3 Elimination of specific exemption for professional football leagues
In general— Paragraph (6) of section 501(c) of the Internal Revenue Code of 1986 is amended—
by striking “, or professional football leagues (whether or not administering a pension fund for football players)”, and
by inserting “or” after “real-estate boards,”.
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2013.
Sec. 4 Special rules relating to professional sports leagues
by redesignating subsection (s) as subsection (t), and
by inserting after subsection (r) the following new subsection:
“(s) Special rules relating to professional sports leagues—No organization or entity shall be treated as described in subsection (c)(6) if such organization or entity—
“(1) is a professional sports league, organization, or association, a substantial activity of which is to foster national or international professional sports competitions (including by managing league business affairs, officiating or providing referees, coordinating schedules, managing sponsorships or broadcast sales, operating loan programs for competition facilities, or overseeing player conduct), and
“(2) has annual gross receipts in excess of $10,000,000.”
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2013.