Ernst proposes taxpayer savings by ending tax-exempt status for professional sports leagues

U.S. Sen. Joni Ernst (R-IA) wants to save American taxpayers roughly $100 million over a decade by excluding major league professional sports leagues from qualifying as tax-exempt organizations.

“Professional sports leagues – which are raking in millions of dollars from television rights and membership dues – shouldn’t also be scoring a hole-in-one with their taxes,” said Sen. Ernst, who on June 19 introduced the bipartisan Properly Reducing Overexemptions for Sports Act, also known as the PRO Sports Act, S. 3086. U.S. Sen. Angus King (I-ME) is the bill’s original cosponsor.

“The PRO Sports Act amends the tax code to revoke this unnecessary exemption,” Sen. Ernst said. “Senator King and I are cutting this wasteful spending and protecting taxpayer dollars.”

Provisions under S. 3086 specifically point out that league-wide operations of the National Hockey League (NHL), Professional Golf Association (PGA) Tour, and the Ladies Professional Golf Association (LPGA) together generate more than $1 billion annually “and these businesses are unmistakably organized for profit and to promote their brands,” according to the draft text of the bill provided by Sen. Ernst’s office.

If enacted, S. 3086 would amend the Internal Revenue Code of 1986 to stipulate that businesses conducting operations for profit will not qualify for tax-exempt status under section 501(c)(6) of the act, specifically those having more than $10 million in gross receipts.

Such operations would include “a professional sports league, organization, or association, a substantial activity of which is to foster national or international professional sports competitions” by, for example, managing league business affairs, officiating or providing referees, or managing sponsorships or broadcast sales, among other activities, according to the draft text.

“Sports leagues like the NHL and the PGA Tour provide entertainment for millions of Americans, but that doesn’t mean these league-specific brands should be able to utilize Section 501(c)(6) of the tax code to be tax exempt,” said Sen. King. “This bill would help close loopholes that allow leagues to boost their profits at the expense of taxpayers – it’s just common sense.”

Amendments under S. 3086 would apply to taxable years beginning after Dec. 31, according to the draft text.

The bill has been referred to the U.S. Senate Finance Committee for consideration.