Thursday, October 5, 2006
House Ways & Means Committee Chair Bill Thomas has questioned the NCAA's tax exempt status in a letter to NCAA President Myles Brand:
Since 2004, the Committee on Ways and Means of the U.S. House of Representatives has been conducting a broad review of the tax-exempt sector. As the sector increases in size, scope, and economic impact, the need for Congress to conduct comprehensive oversight grows as well.
Educational organizations comprise one of the largest segments of the tax-exempt sector, and most of the activities undertaken by educational organizations clearly further their exempt purpose. The exempt purpose of intercollegiate athletics, however, is less apparent, particularly in the context of major college football and men's basketball programs.
As you know, the National Collegiate Athletic Association (NCAA) represents intercollegiate athletics in legislative matters before the Federal government. As the Committee continues its review, I am writing to request information on whether major intercollegiate athletics further the exempt purpose of the NCAA and, more generally, educational institutions. Your responses to the following questions will assist the Committee in this matter.
- Associated Press
- USA Today
- The Hill
- Indianpolis Star:
University of Illinois law Professor John Colombo, a tax expert who also testified before the committee, believes the NCAA is in no real danger for two reasons: IRS precedent and the popularity of college sports. "(The IRS is) going to reverse 40 years of their own precedent?" Colombo said. "And if they do, how will congressmen from Texas and California -- and let's throw Oklahoma in there -- react? It's a political non-starter. "This is a not-so-subtle warning to the NCAA that its actions have consequences. The message is that Congress could step in and make your life miserable."
Update: Mike McCann has more on Sports Law Blog.