Late move allows pro tours to retain tax-exempt status in Senate bill

PONTE VEDRA BEACH, FL - MAY 03: A scenic view of the 12th hole during previews prior to the start of THE PLAYERS Championship on THE PLAYERS Stadium Course at TPC Sawgrass on May 3, 2017, in Ponte Vedra Beach . (Photo by Ryan Young/PGA TOUR) PGA Tour

Late move allows pro tours to retain tax-exempt status in Senate bill

PGA Tour

Late move allows pro tours to retain tax-exempt status in Senate bill

The tours weren’t talking, the lobbyists fretted and not until late Saturday were some of golf’s biggest organizations assured their tax-exempt status was safe.

That status was preserved in advance of the Senate vote on their version of the Tax Cuts And Jobs Act. The PGA Tour and LPGA Tour faced major changes to their 501 c(6) tax-exempt status.

The Senate’s language amended the tax law to eliminate the words “professional sports leagues” from the 501(c) tax code and specifically prevent such organizations from using non-profit status when filing tax returns. Never clear in the effort was who wrote the clause and whether it was directed at golf or, more likely, the NFL, whose tax status was highlighted in an Oct. 10 tweet by President Donald Trump

https://twitter.com/realDonaldTrump/status/917694644481413120

Had the Senate bill passed and survived reconciliation in the House before reaching President Trump’s desk, the tours faced major tax increases. The PGA Tour’s status has allowed the organization to pass a majority of its net revenues to tournaments and players, without taxation.  

“It would have been a nightmare for the Tour and its charities if this happened,” said an industry source familiar with the provision. The source requested anonymity because they were not authorized to speak publically on the subject. 

The tours would have been forced to become taxable nonprofits. Any charitable giving from net revenue would still have been deductible against gross income, but the change figured to have far reaching ramifications for the tours relationships with their many tournaments.

“We know we speak for the thousands of charities, communities and citizens across the country who have been positively impacted by the PGA TOUR’s commitment to giving back when we say we are extremely pleased that the provision affecting our tax-exempt status was removed from the tax reform bill passed by the Senate,” the Tour said in a statement.

The PGA of America is also a 501 c (6) that only partially profits from its ties to a professional sports league, with the impact of the proposed legislation still unclear. Its CEO, Pete Bevacqua, declined comment.

The PGA Tour has lobbied Capitol Hill for years to ensure its tax status remains in place, arguing that while the costs of conducting tournaments are higher, professional golf has also helped form and sustain a structure that has raised more than $2 billion for charity thanks to the efforts of tournaments (which operate under the 501 c (3) status).

In 2013, former Oklahoma Senator Tom Coburn, introduced the PRO Sports Act to rescind the non-profit tax status of professional sports leagues.

“People are surprised … ‘You mean there’s a place in the tax code for the PGA or the NFL to hide and not pay money?’ And the fact is, is yes,” Coburn told ESPN’s Outside The Lines.

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